Waste Management, Inc. (WM), Republic Services, Inc. (RSG): Dumpster Diving for Investment Ideas

Waste Management has been solid as a rock. Its operating cash flow only dipped below two billion dollars, barely, in one year (2003) out of the past 13. This from a company worth just south of $20 billion.

That dividend looks juicy

One thing many income investors will find attractive about Waste Management is its dividend. For a few years Waste Management’s annual dividend was one cent. Fortunately for investors, in 2004 Waste Management began paying more respectable dividends. Distributions have been given in every quarter since 2004, and have not once been lowered since then. Let’s take a look at the total dividends distributed by these two companies over the past few years.

Both of these companies have fairly delectable dividends which have not been lowered in some time. However, Waste Management’s large advantage in dividends paid over the past nine years relative to market cap leads me to give it the edge in terms of dividends, despite its higher payout ratio.

Final foolish thoughts

America’s waste management industry is dominated by two large national companies who are very similar in many aspects. Their relative operating cash flow is similar, and they both have healthy, sustainable dividends. I give the slight edge to Waste Management for two reasons. It has a more attractive history of dividends, and its Wheelabrator business is one that I can truly be proud to own. But defensive investors can’t really go wrong with either one of these companies.

Ryan Palmer has no position in any stocks mentioned. The Motley Fool recommends Republic Services and Waste Management. The Motley Fool owns shares of Waste Management. Ryan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Dumpster Diving for Investment Ideas originally appeared on Fool.com.

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