Waste Management, Republic Services Offer Large Yields

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These days it's tougher to find a competitive yield without taking on too much risk. Waste collectorsWaste Management ( WM ) andRepublic Services ( RSG ) carry above-market yields and offer lower volatility.

Waste Management currently pays 36.5 cents a share each quarter or $1.46 on an annual basis. It yields about 3.3%, compared to 2.41% for the S&P 500. The company has steadily increased its shareholder dividend over the years. Waste Management's dividend has nearly doubled since 2004.

Republic Services pays stockholders 26 cents a share each quarter or $1.04 annually. The company last bumped up its dividend by 11% to the current rate in July. The current yield is 3%. The firm's dividend has sharply increased from just 4 cents a share about 10 years ago.


Both are among the highest-yielding stocks in IBD's Pollution-Control group. Waste Management has the second highest, while Republic Services has the third-best yield.

Both stocks have betas below 1, meaning they have fewer ups and downs than a general market index such as the S&P 500, which has a beta of 1.0.

Revenue growth at both companies accelerated in recent quarters. Waste Management's sales growth has picked up to 5% in Q3 from 1% in Q1, helped by, in part, higher fuel surcharges and higher collection yields. Republic Services' top-line growth climbed to 6% in the third quarter, lifted by higher yields and fees. That marked its biggest gain in years. Sales edged up 1% in Q1 and 2% in Q2.

Waste Management has pulled back into buying range from a 43.69 buy point in a flat base. It retreated in some heavy volume, which is not ideal. But the stock went through a solid period of accumulation from late October to late November.

Republic Services has shaped a saucer-with-handle-like base with a 35.39 buy point.



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: Investing , Investing Ideas

Referenced Stocks: RSG , WM

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As of 12/26/2014, 04:15 PM


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