The Bill & Melinda Gates Foundation’s investment in Waste Management (NYSE:WM) may seem surprising at first glance. After all, the foundation is known for its focus on global health and development, not trash removal.
However, the investment actually makes a lot of sense when you consider the foundation’s investment philosophy. We dive into why Bill & Co bet the farm on this “filthy” stock – that admittedly has a lot of shine to it!
- The Gates Foundation is a long-term investor. This means that the foundation is not looking to make quick profits, but rather to invest in companies that have the potential to grow over the long term. Waste Management is a good example of this type of company; it has been in business for over 100 years and has a strong track record of profitability.
- Waste Management is a “sustainable” company. It is committed to reducing its environmental impact. WM has invested billions of dollars in recycling and material recovery, and it has also reduced its greenhouse gas emissions by more than 40 percent. This focus on sustainability aligns with the Gates Foundation’s mission.
- WM is expected to continue to grow in the coming years. The company’s earnings are forecast to grow by over 11 percent in the coming 12 months, while the stock price is expected to rise 10.5 percent to a median target of $177.75. This makes Waste Management a good choice for both conservative growth and income investors.
The Gates Foundation is a long-term investor that seeks to generate steady returns with minimal risk. Waste Management is a well-established company with a long history of profitability. The company also operates in a relatively stable industry that is not susceptible to economic downturns.
In addition to its financial stability, Waste Management is also a socially responsible company. The company has invested billions of dollars in recycling and material recovery, and it has also reduced its greenhouse gas emissions by more than 40 percent.
Over the past few years, Waste Management has steadily increased its profitability. The company’s earnings per share have grown from $0.50 to $1.20-1.50. The company also pays a reliable dividend of $2.80 per share, which yields just over 1.7 percent.
Waste Management is forecast to continue to grow in the coming years. The company’s earnings are projected to grow by over 11 percent in the coming 12 months, while the stock price is expected to rise close to $180 per share. Considering that the company’s dividend payout ratio is still below the key 50% level, there’s also a good chance that management will keep up its 20-year streak of dividend increases.
The bottom line is Waste Management is a solid choice for both conservative growth and income investors. The company offers a combination of steady earnings growth, a reliable dividend, and a focus on sustainability. And it’s a good match for the Gates Foundation, which is looking to generate long-term returns.