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American Water Increases Quarterly Dividend by 8.7 Percent

This is the fourth consecutive year American Water has increased its dividend

VOORHEES, N.J.--(BUSINESS WIRE)-- American Water Works Company, Inc. (NYSE: AWK) announced today that its Board of Directors increased its quarterly cash dividend payment from $0.23 to $0.25 per share, an 8.7 percent increase. The company also refined its dividend policy so that future increases in dividends will be at a rate similar to the increase in earnings per share growth, with a payout ratio between 50 to 60 percent of net income.

"American Water has consistently said that as our net income and EPS grow, so will our cash dividends," said Jeff Sterba, president and CEO of American Water. "Our strong financial performance over the past years, which includes double-digit growth in net income and earnings per share; our belief in the ability to sustain 7 to 10 percent long-term growth; and striking the right balance between reinvestment in our regulated operations and cash dividend payments were the drivers of the Board's decision to increase our dividend and refine our policy so payouts more closely track with financial performance."

This is the fourth consecutive year American Water has increased its dividend.

"Our objective has always been to have a dividend payment practice that is predictable, stable and growing," added Sterba.

The increase will be reflected in the regular quarterly cash dividend, which is payable on September 3, 2012 to all shareholders of record as of July 6, 2012.

American Water offers a dividend reinvestment and direct stock purchase plan called American Water Stock Direct, which enables stockholders to reinvest cash dividends and purchase additional American Water common shares without any brokerage commissions or service charges. Stockholders and other persons may obtain a copy of the Plan prospectus and an enrollment form by contacting American Stock Transfer & Trust Company ("AST") at (888) 556-0423, visiting AST's website at www.amstock.com, contacting American Water's Investor Relations at 877-310-7174 or by visiting the Investor Relations' page at www.amwater.com.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities. The offer is being made solely through the Plan prospectus.

About American Water

Founded in 1886, American Water is the largest publicly traded U.S. water and wastewater utility company. With headquarters in Voorhees, N.J., the company employs approximately 7,000 dedicated professionals who provide drinking water, wastewater and other related services to an estimated 15 million people in more than 30 states and parts of Canada. More information can be found at www.amwater.com.

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American Water Works Company, Inc.
Edward Vallejo
Vice President, Investor Relations
856-566-4005
edward.vallejo@amwater.com
or
Maureen Duffy
Vice President, Communications
856-309-4546
maureen.duffy@amwater.com

Source: American Water Works Company, Inc.

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