Waste Management (WM): A Discounted Stock for the Defensive Investor

Waste Management (WM): A Discounted Stock for the Defensive Investor


Waste Management (WM) is one of the largest waste logistic companies in the United States and has a network of garbage routes, processing plants and landfills that are not easy to simulate. The business is based on long-term contracts to provide a service that is virtually a modern need. Economic ups and downs may have an impact on the business, but you will never be able to do without waste collection.

Apart from that, the return on the share is currently around 2.1% and the dividend has been increased annually for 15 consecutive years. The payout ratio in 2017 was a reasonable 54%. The company’s debt accounts for around 60% of the capital structure. That is rather a lot, but not inappropriate due to the capital-intensive nature of the business. The ratio of financial debt to EBITDA is at reasonable 2.3, and the result exceeds the interest costs by more than seven times. There is little reason to worry about the dividend as it currently is.

The revenue and EPS record is positive for the past 5 years and for the most recent 12 months as well. With a market value of $40 billion, WM shares are trading with a price-earnings ratio of 13.96, a price-to-earnings growth ratio of 2.13 and a forward PE of 20.95. The company shares have added 12% over the last 12 months and is currently 0.61% below its 52-week high and 18.28% above its 52-week low.

Business is currently performing particularly well, with second-quarter results exceeding analysts’ expectations. The company has also raised its forecast for the full year. And the management intends to continue to reward shareholders with business growth (with a focus on acquisitions), share buybacks and regular dividend increases. The return may not be huge, but Waste Management is the kind of dividend stock investors can hold and go about carefree, because they can be sure their dividends will come in every quarter.

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I handle much of news coverage for tech stocks, and occasionally cover companies in different sectors. In the past, I've written for other financial sites and published independent investment research, primarily on tech companies. I have a B.A. in Economics from Columbia University. I'm based out of San Diego, but grew up in Southern New Jersey. I play basketball and tennis in my spare time, am a long-time (and long-suffering) fan of Philadelphia's sports teams, and alternate daily between using an iPad Air, a Galaxy Note 3, and one or two Windows PCs.