The Motley Fool, a multimedia financial-services company, recently recommended two waste management companies for dividend-minded investors during this current tumultuous time.
Waste not, want not
One stock the Motley Fool is high on is Waste Connections Inc. (TSX:WCN)(NYSE:WCN). The Motley Fool basis its assessment on the company on its view that waste disposal services will remain relevant whether the economy is booming or coming to a grinding halt. No matter how bad things get, the waste business needs to continue its operations.
The Motley Fool stated that, in its opinion, Waste Connections remains a safe dividend stock because people need the company’s services in a time where most businesses are indefinitely closed. Waste Connections will likely see a decline in its revenue since its industrial and commercial clients are not running their businesses. Still, its residential clients will require waste management.
The company reported $1.54 billion in operating cash flow for fiscal 2019. It used the excess cash for $400 million in acquisitions in 2019. It has planned $500 million in acquisitions planned for 2020. While the recession might slow down its growth, the stock is likely to earn a substantial revenue.
As of mid-day April 22nd, Waste Connections stock was trading for $120.77 per share on the TSX, up 14.7 percent from its price a month earlier. The Motley Fool’s assessment is that it does not offer you a juicy amount in terms of dividends, but it has a reliable 0.91% dividend yield. It also has a respectable dividend growth streak of nine years.
The Motley Fool also considers Waste Management (NYSE: WM) a safe buy at during the current COVID-19 pandemic. The company provides essential services in waste management and recycling. In the view of Motley Fool, Waste Management is recession-proof because it will continue to see strong demand for its services throughout the business cycle. And if it’s one thing that investors can expect from the stock, it’s consistency; during the past six quarters, only once has quarterly revenue fallen below $3.8 billion. Its profit margin is also normally above 10%, falling below that threshold only twice in the past 10 quarters.
Currently, shares of Waste Management are trading at around 23 times earnings and 19 times future earnings. The stock also pays a quarterly dividend of $0.545 that, as of recently, yields 2.4% annually. Waste Management announced its plans to increase the dividend in December; it’s the seventeenth straight year that the company has done so. The company’s President and CEO Jim Fish called dividend payments Waste Management’s “top priority for capital allocation after we invest in the business to drive long-term profitable growth.”
In summary, the Motley Fool considers the stock to be near its low, offering a good and reliable payout, Waste Management is a solid pick up today for long-term investors.
It is the assessment of the Motley Fool that there is no telling how long it will take for the pandemic to diminish and the economies of recovery. In uncertain times, a bit of stability and reliability counts for a lot.
Waste Connections might not have a terrific dividend yield, but it is a stock that offers reliability and an excellent dividend growth streak.
Waste Management can help you earn reliable passive income and protect your capital during the recession.