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Republic Services: Bill Gates Loves It, And You Should, Too

Value Prof profile picture
Value Prof


  • This series explores a portfolio comprised of my top defensive picks for a recessionary environment with a strong overall dividend growth profile.
  • I examine Republic Services, Inc.'s management, current valuation, and dividend strength to determine whether it is a buy at current levels.
  • Republic Services is a relatively low-risk waste management company with higher-than-average revenue and EPS growth.
  • Although a recession could dampen its near-term growth, I view Republic Services as a core DGI holding and superior to its larger peer WM.

Republic Services Garbage Truck

John M. Chase/iStock Unreleased via Getty Images

I maintain two 25-position, equal-weight dividend growth portfolios for my personal investing goals, one with an offensive orientation (my "Ultra High DGI" portfolio) and one with a defensive orientation (my "Defensive DGI" portfolio). Each portfolio has been painstakingly constructed and back-tested to

This article was written by

Value Prof profile picture
I'm Value Prof, a market researcher and former investment advisor primarily focusing on utility and consumer stocks, dividend growth strategies, and occasional swing trades. I like to highlight high-quality, undercovered companies that offer a mix of steady growth and rising income. Drawing on my professional background in finance, technology, and entertainment, I aim to help you navigate the stock market and become a smarter, happier investor by offering well-researched, independent, and often contrarian takes on the news, politics, and the macro environment.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of RSG, WM, WCN either through stock ownership, options, or other derivatives. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (17)

I have been a garbage-pick-up customer of RSG and a stock holder for many years. Their service is great, as are their employees. Their rates seem to rise often, and when they do, I just look at my portfolio, and think "We're both making money, so please raise them some more".
hugh74jones profile picture
Sorry, I can't see RSG in comparison with others in the 100+ price range. Take PM for example, stable, well recommended, P/E is 18-1, whereas RSG P/E is 26-1 ---and PM pays 5 percent yield, whereas RSG a tiny 1.6% yield. Bill Gates has the money to lose a few investments, with hardly a scratch on his arm---most of the rest of us do not!
Bill also loves Waste Management to the tune of $11B... I like WM and WCN a little better right now, but all three have been great.
Value Prof profile picture
@user1416 Very true! And all three on large dips at the moment.
Dividend Growth Fan profile picture
$RSG looks extremely overvalued and provides no margin of safety buying it at the current price.
Value Prof profile picture
@No Fed Pivot Interesting take. At what price do you think would be a buy?
Dividend Growth Fan profile picture
@Value Prof I would start to get interested under $100.
Value Prof profile picture
@No Fed Pivot Sounds good! At $100 I think even Bill Gates would back up the truck.
Added RSG to one of my portfolios. Picking 10 stocks for a 10 year horizon. I think it will do well, good management. I think with acquisitions they have a lot of room to grow.
Value Prof profile picture
@Desmater Agreed, I think that's a smart choice!
RSG is a stock I can never sell. Retired RSG employee, with very low cost shares from many years in the employee stock purchase plan. Looking forward to the dividend tomorrow.

Best company I ever worked for, and great co-workers!
@xjerseyguy turning trash into cash!
Value Prof profile picture
@xjerseyguy Great to know, and congrats on the low cost basis! I may be adding more soon on this dip.
bluescorpion0 profile picture
Can't really get excited about 3% cagr growth in a 4-6% cagr inflation world.
Value Prof profile picture
@scorpionblue The 3%/yr growth forecast for solid waste management globally is adjusted for inflation (ie., the actual growth figure would be 3% plus inflation in today's dollars). RSG's forward long-term EPS CAGR forecast is 11%, while their 5-year total return CAGR is about 20%.

As we saw in 2022, inflation and higher interest rates put pressure on utilities in a number of ways, but customers typically bear the brunt of the cost via rate and fee increases, and most utilities have done quite well so far in this inflationary environment.
bluescorpion0 profile picture
@Value Prof ah that sounds better. But isn't ROIC a bit low at 8%? Should one expect a return higher than 8% a year? I recall Charlie Munger said your ultimate return = ROIC over time.
Value Prof profile picture
@scorpionblue I think 8% a year return plus the dividend growth would be acceptable in this environment, but would note that RSG's 8% ROIC is second-highest in the trash sector and standard for utilities in general (ie., AWK, which in my opinion is the best water utility, has a similar ROIC, and most electric utilities are below 8%). I wouldn't put too much stock in the ROIC = return theory here, as WM's ROIC is quite a bit higher than the others but hasn't outperformed them over time. WM, WCN, and RSG usually track each other pretty closely.
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