1 Dream Dividend Stock up 16% With Even More Upside to Go

WCN (TSX:WCN) stock reported earnings that passed estimates, and full-year guidance that remained solid, keeping it a safe stock to buy now.

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There have been quite a few stocks dropping on the TSX today, yet not all of them have been falling lower. Despite seeing strong earnings from companies across the world, investors are eyeing what the future might look like. Many companies weren’t able to state definitively that future results would be strong.

Yet not all stocks fall into this category.

In fact, there is one dividend stock I would urge investors to consider after it climbed 3% before earnings. Furthermore, shares are up 17% in the last year. Yet, with a consensus price target of $221, there is not only still room to grow but likely more to be added after analysts weigh in. Add onto this a dividend yield at 0.73%, and you’ve got a growth and passive-income winner.

So, let’s look at why investors may want to consider Waste Connections (TSX:WCN) for their watchlist.

What happened?

First, let’s look at why there was at least a small boost after WCN reported their earnings this week. Shares of the stock climbed 3% after earnings, after another 3% the day before ahead of the earnings report.

The company reported earnings that came ahead of analyst estimates, reaching US$1.11 earnings per share for the quarter. This compares to an increase from US$0.89 the year before on an adjusted basis. This is yet another quarter where the company was able to deliver an earnings surprise for investors.

Revenue for the quarter also climbed to US$2.04 billion, compared to US$1.87 billion back in the last three months of 2022. This was an 8.9% climb year over year for WCN stock. Net income also climbed up 16.4% to US$126.8 million, with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) hitting a 32.2% margin of revenue.

An impressive year

Now, that was just the quarter. WCN stock also reported a solid full-year earnings report, seeing revenue reach US$8.022 billion for the year, up 11.2% year over year. Adjusted EBITDA was up 13.6, marking 31.5% of revenue. The net income reached US$762.8 million, with adjusted net income at US$1.081 billion.

The company also made many key acquisitions during the quarter. However, the company stated that after the fourth-quarter results, it’s setting itself up for even more expansion. This includes with margin expansion as well as acquisition activity for 2024 and “outsized growth.”

In fact, acquisitions from the last year have already contributed 4% of revenue for WCN stock just this year. As more acquisitions are added, WCN stock believes there will be a further increase in value, especially with a reduction in pressure from inflation.

Looking ahead

WCN stock was also able to provide guidance, which was fairly stable. Should it have shown anything a bit higher, perhaps the stock would have climbed more than 3%. However, it was still a good result that shows why the company is a strong defensive play.

WCN stock stated adjusted EBITDA growth should reach over 13% for 2024. Furthermore, that adjusted EBITDA margins should increase by 120 basis points, hitting 32.7% of revenue for the year. And again, more acquisitions are on the way, with some from the last year already contributing to revenue. The stock predicts to hit revenue of US$8.75 billion, with net income at US$1.096 billion.

“We are extremely pleased by our 2023 results and our positioning for outsized growth in 2024,” said Ronald J. Mittelstaedt, president and chief executive officer. “Moreover, both employee turnover and safety incident rates exited 2023 at multi-year lows, setting up 2024 for continued improvement in trends, along with the opportunity for outsized margin expansion.”

Should inflation come down and acquisitions go up, WCN stock continues to look like a safe option for investors to consider.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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