Covanta Holding Corporation (CVA): This Energy-from-Waste Stock Is Expensive

Among the three companies, Waste Management offers the highest dividend yield at 3.6%. Covanta ranked second with 3.3% while Waste Connection pays the lowest dividend yield at only 1%. Despite the juicy dividend yield, I am worry about Covanta’s dividends because of its high payout ratio at more than 100%, meaning that Covanta pays more in dividends than what it earns.

My Foolish take

I am not excited about Covanta at its current trading price, due to its high forward earnings valuation and more than 100% payout ratio. Among the three, I like Waste Management the most, with its high dividend yield and low earnings valuation.

Anh HOANG has no position in any stocks mentioned. The Motley Fool recommends Waste Management. The Motley Fool owns shares of Waste Management.

The article This Energy-from-Waste Stock Is Expensive originally appeared on Fool.com and is written by Anh HOANG.

Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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