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Strategies & Market Trends : Dividend investing for retirement -- Ignore unavailable to you. Want to Upgrade?

To: Bocor who wrote (9626)	7/28/2011 3:24:56 PM
From: E_K_S	Read Replies (1) \| Respond to of 34328

I placed two different buys for WM: (1) an add buy at $32.37/share and (2) a GTC to double the position at $28.40/share. Looking at next year earnings at $2.15/share and an industry PE at 18,65 shows a potential value of $40.00/share. Their PE has always been lower with their trailing PE at 16.55 yields a share price of $35.55. With a $1.36 dividend based on today's sell off only yields 4.12%. Therefore I tend to agree with you that the company is not really growing earnings to substantiate any significant dividend increase. Two long term trends could help growth in the future. First, many of the budget strapped cities may look at contracting out their private garbage services to outside companies like WM based on the past (and current) budget issues Cities have experienced. Second, the company can look at reducing expenses through efficiencies like converting trucks to methane gas collected from land fills, steam and/or electricity created from burning garbage using new efficient incinerator technology. Therefore, longer term there are some changing trends that could help earnings grow but w/i next 12-24 months I do not see anything significant other than cost reductions. This limits the upside so adding a few shares now and buying a full position at 15% lower prices would IMO be a good way to set up the trade. At $28.40/share you almost get a 5% yield and on any significant market correction you could get your fill. If this occurs, I will look for a lower low on lower volume to double up my shares. That's how I plan to play it but I do feel that 36 months out you might see earnings growing again as the industry consolidates and many more City contracts are landed. EKS