The Bull Case For Waste Management (WM) Could Change Following Dividend Hike and Free Cash Flow Upgrade

• In the past week, Waste Management's board approved a 10% dividend increase for 2025 and raised its full-year free cash flow outlook, extending its streak of annual dividend hikes to 22 years.
• This move, supported by robust core business growth and successful integration of recent acquisitions, reflects management’s confidence in the company’s continued strong financial health and commitment to shareholder returns.
• We’ll explore how Waste Management’s boosted dividend and higher free cash flow forecasts could affect the company’s investment narrative.

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Waste Management Investment Narrative Recap

To hold Waste Management stock, an investor needs to believe in the company’s ability to deliver steady returns through strong core operations and reliable cash flows, even as it expands via acquisitions and invests in sustainability. The recent 10% dividend hike for 2025 and raised free cash flow outlook reinforce existing confidence, but they do not materially change the short-term catalyst tied to successful integration of the Stericycle acquisition, nor do they remove the bigger risk of increased leverage on financial flexibility.

Among the latest company actions, Waste Management’s progress with integrating WM Healthcare Solutions is especially relevant; management expects annual synergies of $250 million by 2027, which could support the positive momentum behind higher dividends and future earnings growth if realized as planned. Yet, while this supports the ongoing investment case, the company’s elevated debt levels remain important to monitor against potential earnings impact if efficiency targets are missed.

However, investors should keep in mind that higher leverage could quickly shift from a manageable risk to a more pressing concern if...

Read the full narrative on Waste Management (it's free!)

Waste Management's narrative projects $29.4 billion revenue and $4.0 billion earnings by 2028. This requires 7.0% yearly revenue growth and a $1.3 billion earnings increase from $2.7 billion today.

Uncover how Waste Management's forecasts yield a $257.30 fair value, a 18% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members produced 13 fair value estimates for Waste Management ranging from US$160.90 to US$257.30 per share. With some anticipating substantial upside, you may want to compare this range with recurring company risks such as rising leverage, which could directly impact financial resilience across varied market conditions.

Explore 13 other fair value estimates on Waste Management - why the stock might be worth as much as 18% more than the current price!

Build Your Own Waste Management Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Waste Management research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Waste Management research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Waste Management's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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