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