I n a correction, just about all stocks will go down with the general market. But some will hold up well in the face of market weakness. One isWaste Management ( WM ).
Since the market started unraveling more than a week ago, Waste Management has pulled back 8%, while the S&P 500 has fallen as much as 11%. The stock’s relative strength line is still holding near its highs from April, even though the stock is off its April 10 multiyear high by double digits.
Waste Management is seeking support at its 50-day moving average, a level that the S&P 500 has already firmly breached. Waste Management is forming a cup-with-handle base with a 51.93 buy point. But with the market in a correction, new buys should be put on hold.
Houston-based Waste Management provides trash-collection services to commercial, residential and industrial customers.
It also provides materials processing and recycling services. The company has delivered a steady stream of annual profits. It has a five-year earnings growth rate of 4%. It also has a five-year Earnings Stability Factor of 3. Unlike most other IBD Ratings, lower factor numbers are better.
Analysts polled by Thomson Reuters see profit rising 5% to $2.54 a share this year and 8% to $2.74 a share next year.
Last week, the company declared a quarterly dividend of 38.5 cents a share payable Sept. 24 to shareholders of record Sept. 14.
Waste Management most recently announced a dividend hike in late February, raising the quarterly rate by a penny to the current 38.5 cents. The company’s dividend has nearly doubled since 2005.
Waste Management pays shareholders $1.54 a share on an annualized basis. This works out to a yield of about 3.1%, the second highest among the 12 dividend-paying stocks in IBD’s pollution control group. Low-priced and thinly tradedEcology & Environment ( EEI ) has the highest yield, at around 4.3%.