US Ecology - A Small Cap In A Niche Market Paying A 3.2% Dividend

| About: US Ecology, (ECOL)

US Ecology (NASDAQ:ECOL) was formed in 1952 as American Ecology Corporation providing nuclear waste services. Their name was changed in 2010 to US Ecology. The company is one of the few in the nation that treats and disposes radioactive and hazardous and non-hazardous industrial waste. Just think of what the concepts of 'ecology' and 'waste treatment' meant 60 years ago. This is a company that clearly was ahead of its time…who could have foreseen in the 1950's how large the need for treatment and disposal of medical and biotech waste would become along with byproducts of oil refineries, chemical production facilities, electric utilities, steel mills and military installations?

This is a relatively stable business that performs well in all economic conditions. Although US Ecology did see a drop in revenue and earnings during the recession, the annual report shows at year end 2011 the company is back on track and likely will benefit from an increase in demand as the economy improves. Importantly, the company increased its dividend by ten percent twice between 2007 and 2009 and maintained it as the country came out of recession.

The company maintains geographic diversity in their treatment facility locations servicing North America from Quebec, Canada, as well as locations in Michigan, Idaho, Nevada, Washington State, Texas and Idaho. Corporate headquarters are in Boise, Idaho.

US Ecology set record revenues and earnings for the 2nd quarter ending June 30, 2012. Third quarter earnings will be announced October 29, 2012.


Large cap Waste Management (NYSE:WM) and Valhi, Inc (NYSE:VHI) compete in this space but hazardous waste transportation and disposal is only a small portion of their business. Republic Service (NYSE:RSG) does not perform hazardous waste management; therefore is not considered a competitor.

Clean Harbors, Inc. (NYSE:CLH) is a direct competitor offering many similar services across a larger geographic area. Clean Harbors has a larger footprint with 50 waste management facilities in 37 US states and 7 Canadian provinces, Mexico and Puerto Rico. The company also has operations in Bulgaria, China, Singapore, Sweden, Thailand and the United Kingdom. The company was founded in 1980 and is headquartered in Norwell, Massachusetts. Clean Harbors does not pay a dividend.


US Ecology

Clean Harbors

Market Cap






Trailing P/E



Return on Equity



Operating Margin



Annual Dividend Yield



Held by insiders



Click to enlarge

Source: Yahoo Finance


US Ecology is a small cap stock with growth potential. For investors or retirees like me seeking dividend income, this is an appropriate selection. ECOL has paid dividends since 2004. During the recent downturn the company twice increased dividends by ten percent between 2007 and 2009. In addition, the company produced record operating income results in the 2nd Quarter of 2012. I think it is significant that with only 387 employees, insiders own 8 percent of the company, tying their future to the success of the business!

US Ecology is much smaller by market capitalization than its nearest direct competitor, Clean Harbors, Inc. But, from the company website, US Ecology is also "the nation's most comprehensive supplier of cost-effective treatment and disposal services for low-level radioactive wastes, hazardous and PCB wastes and naturally occurring, accelerator produced and exempt radioactive materials. US Ecology takes pride in its excellent regulatory compliance record and long history of industry leadership." This is a 60 year old company with what appears to be a bright future!

Disclosure: I am long WM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.