Environmental Services Sector

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Waste Management - >>> 3 Recession-Ready Stocks to Buy Right Now


https://www.fool.com/investing/2020/10/29/3-recession-ready-stocks-to-buy-right-now/


Waste Management

Top industrial stocks tend to be cyclical in nature, ebbing and flowing with the broader economy. This is somewhat true for Waste Management, which relies heavily on the commercial and industrial sectors for its revenue. However, Waste Management's diversified business model makes it well prepared for a recession.

Despite a challenging business environment, Waste Management's revenue fell just 4.6% in the first half of 2020 compared to the first half of 2019. The company expects to finish the year with revenue down 4% to 5% and free cash flow to be $2 billion, which is plenty to cover the company's dividend payment of about $900 million.

The company attributes this relatively small decline to its "diverse and largely non-correlated customer base [which] creates recession resistance." Like Clorox, Waste Management pays a sizable and growing dividend. Its goal is to use 40% to 50% of its free cash flow for dividends, which it's on track to do this year. Waste Management has grown its dividend for 17 consecutive years and yields 1.9% at the time of this writing.

A risk-averse trio with income and growth

Clorox, Adobe, and Waste Management are a good basket of stocks if you're worried about a recession. Clorox and Waste Management provide stable and growing dividends during good and bad times. Clorox is the safest stock on the list. What it lacks in growth is made up for by Adobe, which grants exposure to tech, but through a subscription model that is likely to perform well even during a recession. Waste Management gives exposure to the industrial sector, but without the typical cyclicality. Each stock looks to be a good investment on its own, but they are arguably even stronger as a basket.

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