Cashing in on Waste Management, Inc. (WM)

The global drive for "greener" economies is set to be a boon for the waste management industry. With a dividend yield of close to 4%, what does this mean for Waste Management Inc. (WM), the country's largest service provider?

The global movement to “greener” economies has resulted in effective waste management fast becoming one of the critical industries of the new century. Many countries around the world are instituting tough legal measures to ensure that waste is effectively dealt with and properly recycled.
Investors looking to get in on this trend would do well to consider Waste Management Inc. (WM) as a stock for their portfolio. The company has a dividend yield of 3.92%.
Waste Management, Inc. (WM) is the leading provider of comprehensive waste and environmental services in North America, yielding 3.92% with a good dividend history.
At the end of 2009, the company serviced around 20 million municipal, commercial, industrial, and residential clients through a network of 367 collection operations, 355 transfer stations, 273 active landfill disposal sites, 16 waste-to-energy plants, 134 recycling plants, and 111 beneficial-use landfill gas projects.
Since declaring its first dividend in 1998, the company has shown a commitment to shareholders to raise the payout. “We remain committed to returning cash to our shareholders while at the same time making strategic investments that will increase future cash flows," said David P. Steiner, Chief Executive Officer, when the company released first quarter results recently.
For the first quarter ended March 31, 2010 net income was $182 million, or $0.37 per diluted share, compared with $155 million, or $0.31 per diluted share for the first quarter of 2009. This represents a 19% increase in diluted earnings per share. Revenue for the first quarter of 2010 was up 4.4% at $2.93bn while free cash flow was a handy $253 million.
Asked about the outlook for the group, Steiner commented: "We saw further signs of improvement in our business during the first quarter of 2010. Revenue increased over 4% compared with the first quarter of 2009, primarily because of improving commodity prices and year-over-year yield increases. And volume comparisons continued to show improving trends."
The company was founded by enigmatic businessman Wayne Huizenga. According to Wikipedia, he started “with a single garbage truck in 1968, and grew Waste Management, Inc. (WM) into an entity that would become a Fortune 500 company. Huizenga aggressively purchased independent garbage hauling companies, and by the time he took the company public in 1972, he had completed the acquisition of 133 small-time haulers. By 1983, he grew Waste Management into the largest waste disposal company in the United States.” He owns 5% of the Miami Dolphins and also built up Blockbuster (BBI) and AutoNation (AN).
With the global economy coming out of the recession and facing increased risks and uncertainties going forward, investors will be looking for sustainable businesses which have minimal impact on the social environment. Service providers who can help companies do so are likely to benefit over the next few years and with a handy dividend yield, Waste Management Inc (WM) makes waiting well worth it.
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