Waste Connections

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Middle-tier waste management firm Waste Connections ( WCN) may not have the same scale and notoriety as its larger publicly-traded peers, but there's no doubt that this is a garbage stock -- and I mean that in the best way possible. Waste companies are a friend to dividend investors: They're typically not terribly capital intense and they generate sticky recession resistant revenues.

Now WCN looks ready to hike its dividend in 2012.

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Even though WCN competes directly with the big names in garbage disposal, it makes a conscious effort to avoid their geographic footprints. Rather than the lucrative urban areas that bigger rivals focus on, WCN has its operations in smaller markets that provide less competition. And that's worked like a dream...

Not only does WCN have deeper net margins than its larger peers, but it's also managed to churn out significant growth through and after the recession when rivals faltered. One side effect of that growth is a lower dividend payout, but it makes much more sense for WCN to be financing its growth internally right now instead of paying shareholders cash and limiting returns.

Strong free cash generation should help spur an increase to the firm's quarterly dividend of 9 cents, a 1.25% yield at current prices.

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