American Ecology: Turning Trash into Cash

Another one of the many high dividend paying stocks from our High Dividend Stocks by Sector tables, American Ecology (ECOL), has the highest dividend yield in the Waste Management industry, with a current dividend yield of approximately 4.25%.

ECOL provides hazardous and non-hazardous waste treatment, disposal, transport, and recycling services to government and commercial businesses, such as oil refineries, chemical producers, manufacturers, utilities, medical facilities and military bases, among others.

The firm managed to maintain steady earnings year-over-year for the quarter ending Sept. 30, 2009, coming in at $.23/share again, which covered its dividend of $.18/share. Their income was aided by the intro of their new thermal recycling services at their Texas facility, which helped their refinery segment business to increase by over 100%.

ECOL bests its peer group in several important metrics in our Industry Comparison table.

There are covered calls and put options available for ECOL. The March 2010, $17.50 covered call option, WQCCW, is currently bid at $.95. Covered call sellers could more than double this dividend by selling call options against their underlying shares. They'd also receive $.18/share in dividends during this period, for an annualized static yield of roughly 16%.

More conservative investors may want to sell the March 2010 $15.00 put option, WQCOC, which is currently bid at $.80.

Disclosure: No positions.

Comments

[sticktoitiv...:]

I like this pick. Lots of cash. Almost no debt. And its in a nice industry.

Oct 31 12:42 AM

[mbkelly75:]

Nice catch - I just became a subscriber to your newsletter. I agree with your view of LINE - they really are undervalued and trending up besides. Thank you.

Oct 31 12:44 AM

[Mr. G:]

I do not see the US diminishing the supply of trash anytime soon. Nice find. GI

Oct 31 02:48 PM

[anarchist:]

The last month has seen it in a death spiral?

Oct 31 02:56 PM

[mbkelly75:]

ECOL is dropping in price - Death Spiral - maybe yes and maybe no. If it drops down to $14.40, that nice 4.33% dividend will be an even better 5%. The 20 Day MA touched the 50 Day MA at Friday’s close. It will not be a Death Cross until the 20 Day crosses the 200 Day still moving down, which may or may not happen. It might, but the fundamentals of the stock will improve if it drops a bit more anyway. It’s PEG Ratio is still a bit high at 0.91 and the P/S Ratio is high at 1.95. There are some good points about the stock right now: 1) NO debt at all, 2) $1.36 Cash/Share (more than enough to pay the $0.72 dividend), 3) Insider Buying at it’s current price. Insiders sell for a variety of reasons - they only buy for one reason., 4) Insider owned - at 7.13% ownership - they have skin in the game - they win or lose right along with the stock., 5) Over the last 5 years - the stock has given a solid 74.57% return. This stock is well worth keeping an eye on and is a good suggestion by the writer.


On Oct 31 02:56 PM anarchist wrote:

> The last month has seen it in a death spiral?

Oct 31 06:08 PM

[rrtzmd:]

...I don't know...book is only about $5 a share...return on equity isn't very good...and overall company performance has been stable but not growing...until the economy's condition more clearly improves, I'd be inclined to avoid it...

Nov 02 09:00 AM