Just last night, I was reading through the annual report at Waste Management (WM). It is the definition of a stable cash generator. You can lump it alongside utilities and consumer non-cyclicals as “best type of stock to hold during a recession.” I personally like it because trash is a self-evidently unsexy business, and the executive culture at such businesses tends to be light on stock bonuses, general dilution, overhyped acquisitions, and other largesse that tends to attach to billion-dollar enterprises.
Over 25+ year periods of time, you tend to get 3.5% revenue growth and 7.5% earnings growth with a business like this. Throw in a 2.5% dividend, and your results will tend to mirror the S&P 500 over long periods of time.
If you are investing according to Warren Buffett’s “Twenty Punchcards” or trying to put together a career where you beat the S&P 500 by four points annually, … Read the rest of this article!