Not every great dividend stock has a high yield.
Waste Connections (TSX:WCN)(NYSE:WCN) is a solid example of that. While the stock may seem boring, it offers investors a rare combination of steady growth, a defensive business model, and a remarkable track record of dividend increases. It’s a solid stock to build your portfolio around over the long term. The stock is up an impressive 77% over the past five years, and it offers a dependable dividend, which currently yields less than 1%.
That may seem underwhelming but the company has been increasing its dividend over the years, and so if you bought the stock years ago, you would be collecting more on your initial investment. In five years, the company has increased its dividend by more than 70%. And with its payout ratio right around 50%, there’s still plenty of room for it continue making more dividend increases in the future.
What makes the business a solid one to invest in is its attractive business model. The company operates in the waste management industry, providing collection, transfer, and disposal services. This is a business that generates predictable revenue regardless of economic cycles. Everyone needs their trash collected, which provides a stable and recurring cash flow stream that insulates the company from the market volatility that affects more cyclical industries.
Waste Connections is a potentially great option for long-term dividend investors and those looking for a stable, long-term anchor for their portfolio. Its essential service provides a defensive moat which can be incredibly value at a time of economy uncertainty, and a great way to reduce your risk in the market.
