Long-term investing in safe, stable stocks is one of the best strategies to create wealth over time, even during tough economic times. Why? Because while the economy can fluctuate, stable companies tend to withstand these fluctuations and often emerge stronger. Investors who stay the course with solid companies can benefit from consistent growth, dividends, and the power of compounding. Waste Connections (TSX:WCN) is the perfect example of this strategy in action, thereby demonstrating how a well-run business can thrive even when the broader economy faces challenges.
About WCN
Waste Connections operates in the essential services sector, managing waste and recycling for communities across North America. This industry is not just a necessity, but it’s also recession-resistant. People and businesses will always produce waste, regardless of economic conditions. This inherent stability provides a strong foundation for long-term investors. Even during market downturns, Waste Connections continues to generate significant revenue, as evidenced by its recent quarterly earnings. Here it showed an impressive 11.2% revenue growth year over year.
What sets Waste Connections apart is its efficient business model and strong management. The company’s ability to maintain high profitability is reflected in its 19.48% operating margin and a net income of $861 million over the last 12 months. These numbers show that the company is not just growing but also managing its costs effectively, a critical factor in delivering long-term returns to shareholders. This consistent profitability makes Waste Connections a reliable investment choice, even during times of economic uncertainty.
Consistency
Waste Connections’s recent earnings growth of 31.7% year over year indicates that the company is not just stable but also expanding at a rapid pace. In a market where volatility is often the norm, a company that can consistently grow its earnings at this rate stands out. For long-term investors, this means capital appreciation as the stock price reflects the company’s improving financial health over time.
One of the underrated benefits of holding safe, dividend-paying stocks like Waste Connections is the steady income they provide. Waste Connections has been increasing its dividend, offering both a forward annual dividend yield of 0.64% and a payout ratio of 33.33%. While the dividend yield may seem modest, it’s the consistency that counts. Particularly during tough economic times when other investments might falter. This steady stream of income can be a game-changer for long-term investors, who can reinvest dividends and take advantage of compounding returns.
The company’s low beta of 0.72 also indicates that it’s less volatile than the broader market. This means that Waste Connections tends to fluctuate less in value during market downturns, providing a smoother ride for investors. When economic turbulence hits, having a stock in your portfolio that doesn’t swing wildly can offer peace of mind while still delivering returns. Waste Connections has shown that it’s built for the long haul, making it an ideal investment for those seeking stability.
Bottom line
Long-term investing in safe, stable stocks like Waste Connections can indeed create immense returns, even during tough economic times. In fact, $1,000 would have purchased you eight shares five years ago. Today? That would be worth more than double at $2,016.90 at writing!
With its strong financials, consistent growth, and recession-resistant business model, Waste Connections exemplifies how investing in essentials can help build wealth steadily. For investors seeking a reliable anchor in their portfolio, Waste Connections offers both stability and growth potential, making it a perfect stock for long-term success.
