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Strategies & Market Trends : Dividend investing for retirement
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To: Steve Felix who wrote (5357)8/10/2010 6:39:43 PM
From: E_K_S  Read Replies (1) of 34328
 
Hi Steve -

I bought a starter position today in Waste Management, Inc. (WM). Dividend yield is 3.7%. Company has a lot of debt too. I try to follow Buffet's rule that LT debt should not exceed 4x annual net income. WM's annual net income can pay off LT debt in just over 9 years. PE is not too cheap either at 14x next year's earnings. Therefore, I will acquire more shares if the price drops lower.

I like the company as it is a defensive play. They have raised their dividend every year in the last 6 years and it's a growth industry as everybody must have garbage service.

This is in my taxable account. One of my own rules is to own companies that I use, especially those that charge me monthly (like Comcast-cable, electric utility, garbage- Waste Management). I did some clean up at my home and had to do a dump run. WM owns the local dump site in my area. They share their fees with the city. My $60.00 fee for my pick-up load was their minimum charge. In my area two of our other dump sites will be filled (& closed) by 2020 and the WM site is estimated to be filled by 2050. Fees increase every year and the site costs are pretty much fixed after the initial environmental design and liner buid-out is completed.

My plan is to build a large enough position so that the dividends generated (less taxes paid) cover my monthly garbage expenses. That's about 250 shares at the current price. I will also have to add more shares as my garbage fees increase and/or dividends do not keep up with the fees charged.

EKS
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