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Waste Management(WM - Get Report) is in the business of turning trash into cash. And it does it in more ways than just one. Yes, the firm's fleet of trucks collects trash around the country, bringing it to one of 271 active landfills flying the Waste Management flag, but WM also owns considerable waste-to-energy generation capacity thanks to 22 Wheelabrator plants.
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Waste Management's leading market position in the garbage business is attractive. Typically, waste collection is thought of as a recession resistant industry (even if customers produce less waste during downturns, they're unlikely to stop getting trash services). And WM has a stellar track record of generating cash, leveraging its size to capture national accounts that smaller players in this fragmented space can't swing. Management has an eye on costs in 2013, as WM looks to expand margins and avoid getting squeezed on its bottom line.
Even though the waste business is capital intense, WM operates with a reasonable amount of leverage when its $1 billion cash and investment holdings are factored in. On the dividend spectrum, waste companies are utility-like, and WM's 4.07% yield is evidence of that right now. The firm has the wherewithal to hike its 35.5-cent shareholder payout this quarter, and I think it's likely to.