Waste Haulers Provide Unglamorous But Steady Stocks


If private trash haulers quit hauling trash for 16 days, most people would feel more pain than they did during the government's recent partial shutdown.

Waste collection, disposal and recycling would be hard to live without. And that's why many income investors look for investment opportunities in essential and unglamorous companies. They often provide steady earnings and dividends.

Waste Management ( WM ) fits the description. The Houston company serves 20 million customers in the U.S., Canada and Puerto Rico.

Waste Management also produces renewable energy -- more than twice the amount of electricity of the entire U.S. solar industry, according to the company. As of December, the company had 138 landfill gas projects.

The three-year and five-year Earnings Stability Rating is 2 and 4 respectively. The gauge runs from 0 (calm) to 99 (erratic).

The Street expects earnings to grow 5% this year. Analysts expect 10% EPS growth in 2014, which would be the best growth since 2008.

Waste Management pays a quarterly dividend of 36.5 cents a share, almost double what it paid in 2004. The annualized yield is 3.3% vs. 2.42% for the S&P 500.

Look for a possible dividend increase in March. The company has raised the dividend in each of the past 10 years. In nine years, the increase came in March.

Stock performance so far this year has been solid: up 30%, matching the Nasdaq and outperforming the S&P 500's 24% gain.

In August, Waste Management bought two North Dakota companies that remove oil-fracking waste. Many investors like companies that piggyback a trend rather than drive it because the risk and the exposure is lower.

Seasonality has some impact on Waste Management's revenue and profit. Revenues are higher in the summer due to construction and demolition. Costs are higher in Q1 because winter is a better time for maintenance.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: WM

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