Don’t Give Up on Dividends: This Rock-Solid Dividend Stock Will Reward You Through Thick and Thin

Shares of WM (NYSE: WM), the North American waste and resource recovery leader formerly known as Waste Management, slipped after the company posted its third-quarter 2025 results. While broader markets rallied over the past year, WM’s stock has been largely range-bound — a disconnect rooted in short-term headwinds rather than the durability of its cash generation.

The headline numbers tell the immediate story: adjusted diluted earnings per share landed at $1.98, a touch below the $2.01 consensus and up just 1% from the same period in 2024. The core collection, transportation, and disposal operations delivered record performance, underlining the resilience of WM’s essential services. But two growth avenues — healthcare solutions and recycling — came up light and dampened the quarter’s overall picture.

What dragged on results

WM’s healthcare solutions arm underperformed after the company chose to defer some price increases, leaning into a relationship-first strategy aimed at maximizing lifetime customer value in a sensitive, compliance-heavy sector.

Recycling was the other sore spot. Segment revenue fell by $60 million, largely because market prices for recovered materials slumped. The blended price for single-stream commodities — a mix of paper, cardboard, glass, and more collected in one bin — tumbled about 35%. This approach lifts participation and can trim collection costs, but it pushes up processing complexity and expense. With end-market demand soft, WM fetched just $68 per ton for single-stream materials, down from $101 a year ago, and now expects around $75 per ton in 2025 (below a prior outlook of $80).

Renewable energy pricing softened as well. Credits under the Renewable Fuel Standard (RINs) averaged $2.56, down from $3.08 last year, squeezing the economics of landfill gas-to-fuel projects in the near term. These price shifts highlight how monetizing sustainability can be cyclical — even as the underlying transition work remains critical.

Guidance: lower top line, strong cash engine

WM now projects $25.2 billion in 2025 revenue, at the low end of earlier guidance. The company cited weaker recycled commodity pricing and a more cautious outlook for healthcare solutions as the primary drivers. Yet the cash flow story is far brighter.

• 2025 free cash flow (FCF) guidance: $2.8 billion to $2.9 billion
• 2026 FCF outlook: around $3.8 billion

For context, WM paid a little over $1 billion in dividends in the first nine months of the year ended Sept. 30, underscoring a comfortable coverage ratio. Based on a market capitalization of approximately $83.61 billion and the 2026 FCF outlook, the implied FCF yield is about 4.5%. The current dividend sits at $3.30 per share, yielding roughly 1.5% — leaving ample headroom for continued increases and for funding long-term investments.

Why it matters for income investors

WM has raised its dividend for 22 consecutive years, including a 10% boost last December. With an essential-service backbone that performs in any economy and a growing portfolio in recycling, renewable natural gas (RNG), and healthcare, the company pairs predictability with strategic reinvestment. Even when secondary segments hit turbulence, the core engine throws off the cash needed to both reward shareholders and build for the future.

This balance is particularly relevant to the energy transition. WM’s renewable energy business captures landfill gas — a potent source of methane — and upgrades it into pipeline-quality RNG, displacing fossil fuels and cutting greenhouse emissions. While commodity cycles can swing credit prices, the environmental value and policy tailwinds behind methane mitigation remain secular. Similarly, the recycling business plays a vital role in reducing extraction and emissions — but it is inherently exposed to the ebb and flow of commodity markets. WM’s scale and integrated footprint help it manage through those cycles.

Valuation and the road ahead

Historically, WM has commanded a premium for its defensive characteristics. Today, the stock trades at roughly 27.4 times projected 2025 earnings — below its 10-year median of about 29.4. That’s not bargain-basement territory, but it does suggest the multiple has eased as investors digest near-term pressure in recycling and healthcare.

Looking ahead, several catalysts could support a steadier climb: a healthier pricing environment for recycled commodities, stabilization in RIN markets, industrial and commercial activity that lifts waste volumes, and ongoing efficiency gains in the company’s extensive collection and disposal network. In the meantime, the dividend remains the anchor — well-covered, poised to grow, and backed by a cash machine that continues to hum.

Bottom line

WM may lack the spectacle of high-flying tech names, but it offers something many investors prize more: reliability. With essential services at its core, expanding sustainability platforms, and a long track record of dividend growth, this is a business designed to reward patience. Short-term noise aside, the company’s robust free cash flow and disciplined capital allocation position it to keep raising its payout — through thick and thin.