👋 Howdy Partner,

On Monday we talked about boring businesses.

Today we’re talking about one of the most boring businesses there is - trash.

Waste Management ($WM) is the largest garbage collection and recycling company in North America.

Boring businesses like WM often make investors rich, because they’re built on steady, simple, necessary demand.

But even though it operates in a steady, slow industry this “boring” company had a wild flash of drama. Before we get to that, let’s take a quick look at the business:

Company Overview

Waste Management is the backbone of America’s waste system. Their business is built on four core pieces:

• Collection – residential, commercial, and industrial trash pickup

• Landfills – the largest network of landfill sites in North America

• Recycling – processing paper, plastics, and metals

• Renewable Energy – turning landfill gas into electricity and fuel

It’s a simple, predictable model. As long as people produce trash (which they always will), WM has customers.

Financial Performance

Revenue & EPS Growth

WM has steadily grown revenue at about 7% per year.

EPS has grown a bit faster thanks to expanding net margins and buybacks.

Dividends

WM is approaching Dividend Aristocrat status with 22 years of consecutive dividend hikes.

Dividend growth has been very steady, averaging around 7.5% to 8.5% per year over the past 5 and 10 years.

Payout Ratio

The dividend payments are typically well-covered by earnings, and WM’s steady cash flow makes them highly dependable.