Republic Services

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First up on our list is a garbage stock. And I mean that in the best way possible. Republic Services ( RSG) is the number-two waste management company in the U.S., operating 343 trash collection subsidiaries as well as close to 200 active landfills. Like bigger peers, Republic has also dipped a toe into projects that convert trash into energy.

The garbage business is typically considered recession-proof -- and while that's not strictly the case, it is fairly recession resistant. Consumers need to get rid of their trash whether the economy is struggling or whether it's chugging along, and that's good for Republic. The trash business is profitable, with RSG churning out net margins in the high single-digits. Those margins could improve more in 2012, as some of the firm's bigger input costs (namely fuel) drop this year.

>>5 Financial Stocks Ready for Bigger Dividends

Financially, Republic is in decent shape. While the waste disposal business is capital intense (a single new garbage truck can cost more than $250,000 for example), the firm's operations throw off plenty of cash to cover interest payments and dividend hikes.

Currently, the firm pays out a quarterly 22 cents per share, a 3.46% yield. But I think it's about time for a dividend hike. Investors should watch RSG's second-quarter earnings call at the end of July.

Republic Services shows up on a recent list of 10 New Stocks on All-Star Fund Managers' List.

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