I have recently taken notice of waste disposal companies and how they can be a very good investment. I mean really if you think about it we as humans just keep consuming and increasing our waste. With that being said you have to think of it on the large scale not just your garbage that you take out once a week to the curb. I am not to sure about you but the company that picks up our waste at home is the same company that takes care of the waste from my work. Not only do they do my garbage though, they also do my compost and my recycling. The company I am talking about is GFL Environment Inc(GFL). Now, there is more then just GFL that is in this sector in North America. The 2 other big players in this space are Waste Connections Inc(WCN) and Waste Management Inc(WM).
GFL is the newest of these 3 to go public, they actually went public in March of this year. GFL is a pretty big company spread across Canada and in 27 States in the U.S. They are also the fourth biggest environmental services company in North America with 11,500 employees that service 135,000 commercial and industrial customers as well as 4 million households. That is alot of business. They have only been around since 2007 but have grown the business through mergers and acquisitions. They continue to win more and more contracts which means the business is growing as well. They even had positive earnings in Q2 and Q3 this year. Even though there is a pandemic going on, people are still making waste.
Next I would like to talk about Waste Connections Inc, they are bigger then GFL but they are also located in 42 U.S states and in 6 provinces in Canada. They also service more then 7 million residential, commercial and industrial customers and Employ more then 16,000 people. Waste Connections has been around since 1997 and has made many purchases lately including the purchase of Progressive Waste Services of Canada in 2016 for $2.7 Billion which got their foot in the door in Canada. On October 28th, 2020 Waste Connections announced that they were increasing their dividend 10.8% going from $0.26/common share to $0.27/common share which brings their yield to 0.79%. Not a great dividend but it does show growth and a great return.
Lastly I want to talk about Waste Management Inc. because they are the biggest in North America. Not only that but they are also located in Puerto Rico as well. They service over 20 million residential, industrial, municipal and commercial customers and they have over 44,000 employees. They have been having a stellar year so far as well, beatings on their earnings for every quarter and even keeping their dividend. In fact, they have kept their dividend since 1998 and raised it every single year since. They are the oldest of these 3 companies being founded in 1968 and have done over 100 acquisitions. Their Revenue last year was over $15.5 Billion which is $8.5 Billion more then Waste Connections Inc and over $12 Billion more then GFL. Its no secret that these guys know how to make money.
So basically to break it down, there is definitely money in waste. These companies rely on big contracts from Residential, Commercial, Municipal and Industrial customers. Not only are they dealing with garbage but they are also dealing with recyclables, hazardous waste, liquid and solid waste, landfills and material recovery facilities. With a growing population these places and these jobs are only getting bigger and creating more work for these companies. So why not invest in a growing industry that only has a few competitors? Especially in Canada since this country much like the US loves their monopolies and Colby always says “if you want to invest in a sector invest in the best”.
I personally have taken a small position with GFL this week and will continue to add more to it. I feel like of these 3 companies I mentioned that GFL has the most to gain. They are the smallest of the 3 and also the newest. They will be able to take business away from Waste Connections and Waste Management in Canada and the US. They have made some strategic moves in the last few years to acquire other companies helping them grow in the same way that Waste Connections and Waste Management have done. For that I am going to be very long on GFL. Lets have a look at their numbers.
GFL Environment Inc.(GFL)-$36.29CAD/Share, $11.85 Billion, -1.38 EPS, P/E N/A, Dividend Yield of 0.15% and a Payout Ratio of 27%(12 months trailing).
Waste Connections Inc(WCN)-$130.27CAD/Share, $34.25 Billion, 2.78 EPS, 38.9 P/E(forward), Dividend Yield of 0.82% and a Payout Ratio of 94.8%(12 months trailing).
Waste Management Inc(WM)-$117.14USD/Share, $49.50 Billion, 3.91 EPS, 29.4 P/E(forward), Dividend Yield of 1.87% and a Payout Ratio of 49.5%(12 months trailing).
*Disclaimer, all share prices are after market close as December 3, 2020. I currently hold a position in GFL and will keep it long.
That is all for today and remember everyone, invest in yourself first.