E Waste Management: Turning Trash Into Dividend Treasure

Dividend investors have always favored businesses with stable revenue and earnings, and the ability to weather tough economic periods. The reasoning is simple; companies that exhibit these qualities tend to be able to pay their dividends to shareholders irrespective of prevailing economic conditions. This is an extremely attractive trait for any investor, but in particular, one that is focused on generating predictable income.

This doesn’t just work for individuals, however; many institutions invest with the same principles and goals, including the Bill & Melinda Gates Foundation. One such stock that has been a terrific example of a company that can weather any economic conditions and continue to raise its dividend is Waste Management (WM). In this article, we’ll take a look at Waste Management’s stock and determine if it is a good choice for income-focused investors.

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Is Waste Management a good choice for dividend investors?

Waste Management is a giant in its industry. The company is North America’s leading provider of a suite of environmental solutions, centered around its core waste collection business. In addition, it offers transfer and recycling services to residential, municipal, and commercial customers, and operates landfill gas-to-energy facilities that create renewable energy from methane that is produced as landfill contents decay.

Waste Management counts more than 21 million customers, a total that is growing constantly thanks to the company’s relentless focus on acquisitions, as well as organic growth. The company should produce more than $15 billion of revenue in 2020, and it trades with a market capitalization of nearly $49 billion.

Owning waste disposal stocks is nothing new for dividend investors because they exhibit many of the same qualities as a traditional utility. The company’s revenues are quite stable and predictable, and in Waste Management’s case, they grow nearly all the time due to acquisitions. In addition, waste disposal offers very strong margins, particularly when operating leverage is allowed to work from higher revenue leveraging down fixed costs. This has been Waste Management’s formula for decades and it has worked very nicely for shareholders.

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William K. 1 month ago Member's comment

Certainly an educational article, and a company that I had not paid any attention to. Thanks for the education.