Waste Management Collects Trash, Dispenses Cash

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Gold, bonds, real estate and ... trash?

Waste Management ( WM ), America's biggest garbage hauler, also offers a store of value.

The stock is up 2.7% this year, and while that trails the S&P 500's 6.7% gain, the company in February hiked its dividend for the 11th straight year. The annual dividend yield is now 3.3% at the current share price, topping the S&P average of 1.9%. The long-term dividend growth rate is 6%.


Also, the stock is in buying range after clearing a 45.07 buy point of a saucer-with-handle base in huge volume July 29. That day, Waste Management announced it would sell trash-to-energy subsidiary Wheelabrator Technologies for $1.94 billion in cash to private equity firm Energy Capital Partners.

Houston-based Waste Management collects trash, plus operates facilities that turn the gas produced in landfills into energy.

The planned sale of Wheelabrator is part of the company's plan to move away from less profitable power production. The deal is expected to close late this year.

Meanwhile, CEO David Steiner told Bloomberg on Aug. 6 that he expects "big growth" in sales from pending regulations that would force coal-fired power plants to deposit their ash waste in lined landfills instead of in ash pits.

"The utilities see the regulations coming, so we are already starting to get a lot of coal ash," Bloomberg quoted Steiner as saying.

Waste Management announced July 29 that Q2 profit rose 11% from a year earlier to 60 cents a share, beating views by a penny. Revenue edged up 1% to $3.56 billion, below Wall Street forecasts.

The company boasts a three- and five-year earnings stability factor of 2 on a scale of 1 (most stable) to 99 (least stable).

Profit for the current year is expected to rise 10%, followed by an 8% gain in 2015.



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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