Real income investors have a soft spot for garbage. After all, the waste management industry is historically known for paying out a large chunk of its income in the form of dividends. Enter standard bearer Waste Management (WM - Get Report), a $21 billion trash company that boasts around 270 landfills and a massive fleet of trash collection vehicles across the U.S.
At current prices, WM is good for a 3.3% dividend yield.
Like Reynolds' cigarette business, trash collection is recession resistant and sticky customers can't just let garbage pile up at home if times get tough. Conventional trash disposal isnt WM's only operation. The firm also owns 22 Wheelabrator waste-to-energy plants that are designed to turn the waste that WM literally gets paid to collect into renewable energy that the firm gets paid for again.
The waste business is capital intense, but WM's management has done a good job of not over-leveraging the balance sheet. As the slow recovery helps to propel revenues back up to pre-2008 highs, expect dividends to get boosted. Right now, WM pays out a 36.5-cent quarterly check to shareholders, but that could change in early February with a new set of earnings.