July 30, 2025 a 02:47 am
WM: Dividend Analysis - Waste Management, Inc.
Waste Management, Inc. exhibits a dividend profile that combines stability with moderate growth potential. Over 28 years of dividend history show the company's commitment to returning value to shareholders. Its current dividend yield presents a modest yet secure return, appealing to risk-averse investors.
Overview 📊
Waste Management operates in a stable sector, providing crucial services that ensure consistent financial performance. Its dividend yield of 1.33% might seem low, but its 28-year history of uninterrupted payouts showcases reliability. With a current dividend per share of 3.00 USD and no cuts or suspensions, Waste Management stands as a reliable option for dividend-seeking investors.
| Sector | Dividend yield | Current dividend per share | Dividend history | Last cut or suspension |
|---|---|---|---|---|
| Utilities | 1.33% | 3.00 USD | 28 years | None |
Dividend History 🗣️
A steady increase in dividends per share over the past years underscores Waste Management's commitment to its shareholders. The 28-year history of payments is a testament to its financial strength and prioritization of investor returns.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 1.650 |
| 2024 | 3.00 |
| 2023 | 2.80 |
| 2022 | 2.60 |
| 2021 | 2.30 |
Dividend Growth 📈
The dividend growth rates of 9.26% over 3 years and 7.91% over 5 years reflect a steady upward trajectory in shareholder returns. This growth, though modest, signifies the company's sustainable revenue streams and prudent financial management.
| Time | Growth |
|---|---|
| 3 years | 9.26% |
| 5 years | 7.91% |
The average dividend growth is 7.91 % over 5 years. This shows moderate but steady dividend growth.
Payout Ratio ⚠️
Payout ratios are vital in assessing a company's capability to sustain dividend payments. Waste Management's EPS-based ratio stands at 44.39%, while the FCF-based ratio is 55.83%. These figures reflect a balanced approach, ensuring dividends are well-covered by earnings and cash flow, although the FCF-based payout is slightly higher than ideal.
| Key figure | Ratio |
|---|---|
| EPS-based | 44.39% |
| Free cash flow-based | 55.83% |
With an EPS payout of 44.39% and an FCF payout of 55.83%, Waste Management maintains a disciplined balance between rewarding shareholders and retaining earnings for growth.
Cashflow & Capital Efficiency ✅
Analyzing cash flow metrics is crucial for comprehending the liquidity situation and capital allocation efficiency. A lower Free Cash Flow yield compared to Earnings Yield suggests some reinvestment in the business. A high CAPEX to Operating Cash Flow ratio signals significant reinvestment in operating capabilities.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 2.65% | 2.52% | 3.01% |
| Earnings Yield | 3.37% | 3.18% | 3.46% |
| CAPEX to Operating Cash Flow | 59.94% | 61.35% | 57.03% |
| Stock-based Compensation to Revenue | 0.5% | 0.46% | 0.43% |
| Free Cash Flow / Operating Cash Flow Ratio | 40.06% | 38.65% | 42.97% |
The cash generation ability of Waste Management remains solid, with capital reinvestment levels aligning with long-term strategy and sustainability.
Balance Sheet & Leverage Analysis 📉
A robust balance sheet is fundamental for financial health. Waste Management's leverage ratios like Debt-to-Equity and Current Ratio convey the company's strategic debt utilization for potential growth while maintaining liquidity buffers.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 2.90 | 2.35 | 2.19 |
| Debt-to-Assets | 53.63% | 49.44% | 47.77% |
| Debt-to-Capital | 74.33% | 70.16% | 68.63% |
| Net Debt to EBITDA | 3.66 | 2.82 | 2.68 |
| Current Ratio | 0.86 | 0.90 | 0.81 |
| Quick Ratio | 0.73 | 0.86 | 0.77 |
| Financial Leverage | 5.40 | 4.75 | 4.58 |
Despite high leverage, Waste Management exhibits strategic asset utilization with sufficient backup liquidity, maintaining stability and resilience against financial shocks.
Fundamental Strength & Profitability 📈
Fundamental strength, indicated by high ROE and ROIC values, suggests strong management effectiveness in utilizing equity and invested capital. Margin levels, including Net, EBIT, and EBITDA, highlight operational efficiency.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 33.28% | 33.38% | 32.68% |
| Return on Assets | 6.16% | 7.02% | 7.13% |
| Margins: Net | 12.45% | 11.28% | 11.36% |
| Margins: EBIT | 18.38% | 17.24% | 16.73% |
| Margins: EBITDA | 29.08% | 27.38% | 27.75% |
| Gross Margin | 39.34% | 38.28% | 37.59% |
| Research & Development to Revenue | 0% | 0% | 0% |
Robust profitability and efficient resource allocation signify Waste Management's strong foothold in generating consistent returns on investment.
Price Development 📊
Dividend Scoring System 📋
| Criteria | Score | Score Bar |
|---|---|---|
| Dividend yield | 3 | |
| Dividend Stability | 5 | |
| Dividend growth | 3 | |
| Payout ratio | 4 | |
| Financial stability | 4 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 4 | |
| Balance Sheet Quality | 4 |
Total Score: 32/40
Rating 🗣️
Overall, Waste Management, Inc. presents a solid dividend investment opportunity characterized by stability, moderate growth, and a strategic balance of retained and distributed earnings. Its financial health and operational efficiency reinforce its potential to deliver consistent returns to investors, warranting a positive but cautious recommendation.