Republic Services

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We're double-dipping a bit with Republic Services ( RSG) - I covered this stock in early July as a name that looked ready to increase its dividend, and sure enough it did, increasing its payout to 23.5 cents per quarter, a 3.35% yield.

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But I think that Republic played it a little too conservative with their latest dividend increase, and the firm looks likely to give investors another raise in 2012.

Republic Services is a garbage stock -- and by that, I mean that it's in the waste management business. The company is the No. 2 trash collection company in the country, with 343 individual subsidiaries, close to 200 active landfills and a trash-to-energy business. Republic has considerable scale, and it's managed to turn that scale into consistent financial performance. Net margins have historically come in just shy of double-digits, meaning that the firm turns a very large chunk of its trash into cash.

Like Sysco, Republic Services' growth has come from mergers and acquisitions. Most notable was the Allied Waste merger in 2008 that ballooned the firm's size. Adding pricey purchases to an already capital-intense business means that the firm carries a lot of balance sheet leverage, and we'll want to see RSG pay down some of that debt with the profits that the firm doesn't pay out as dividends.

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