Waste Management, Inc. WM recently announced a 6.5% year-over-year hike in its quarterly dividend payout to 41 cents per share. This brings the annualized dividend payout to $1.64 per share from first-quarter 2016. The first lot of the increased dividend is likely to be paid in March.
A steady dividend payment policy is part of Waste Management’s long-term strategy of providing attractive risk-adjusted returns to its stockholders. The company’s investment strategy takes a holistic view of the rapidly evolving market and deploys a dynamic capital allocation approach to execute its growth strategy. In addition, decent dividend increases at periodic intervals have been one of the company’s most attractive features. The current dividend hike marks the 13th consecutive year in which the company has increased its quarterly dividend.
At the same time, the company authorized a new share repurchase program worth $1 billion. The new share repurchase program replaces the erstwhile program of the same denomination, under which Waste Management repurchased $750 million worth of shares year to date. The company recently entered into an accelerated share repurchase program to further repurchase an additional $150 million worth of shares in early 2016 under the prior authorization.
Waste Management remains confident that it would generate adequate free cash flow to fund its increased dividend and share repurchase program in the future. Over the last few years, free cash flow had increased from between $1.2 and $1.3 billion to a new base of approximately $1.4 billion.
Headquartered in Houston, TX, Waste Management is the largest provider of comprehensive waste management services in North America. The company provides collection, transfer, recycling and resource recovery, as well as disposal services to residential, commercial, industrial and municipal customers. It is also a leading developer, operator and owner of waste-to-energy and landfill gas-to-energy facilities in the U.S.
Waste Management currently has a Zacks Rank #2 (Buy). Other stocks that look promising and are worth a look now include CBIZ, Inc. CBZ, Exponent Inc. EXPO and Navigant Consulting Inc. NCI, each carrying a Zacks Rank #2 (Buy).
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