Waste Connections Inc. (TSX:WCN) has been thriving, posting consistently strong results, with strong earnings, cash flows, and returns. As a result, Waste Connections stock has also been thriving. In fact, it has rallied 68% in the last three years and 17% in the last year. As we look to the remainder of 2025, can we expect more of the same from Waste Connections stock?
Let’s take a look.
Waste Connections – A growing and defensive business
Waste Connections is an integrated solid waste services company. It provides waste collection, disposal, and recycling services in the U.S. and Canada. WCN also provides a lucrative, defensive, and rapidly growing business for investors who are looking for dividends and growth.
This fact is reflected in the company’s latest quarterly result, the fourth quarter of 2024. Revenue in the quarter increased 11% to $2.3 billion. The boost was driven by both volume and pricing increases. This was accompanied by strong margin improvements and bottom-line results. In fact, the company’s earnings before interest, taxes, and depreciation (EBITDA) margin increased to 33%, earnings per share (EPS) was $1.16, and free cash flow was $1.2 billion.
Indeed, Waste Connections has been thriving for quite some time now. In the last five years, its revenue has increased 64% to $8.9 billion. This equates to a compound annual growth rate (CAGR) of 10.4%. Similarly, its EPS has increased 70% to $2.79, for a CAGR of 12.6%.
Outlook
Waste Connections has been a story of growth through acquisitions. This has enabled the company to grow rapidly as it consolidates the waste industry. In fact, in 2024, acquisitions closed amounted to $750 million in annual revenue.
For 2025, the outlook for the company remains robust. Management expects revenue for the year to increase between 6% and 7.6% to $9.45 to $9.6 billion. EBITDA margins are expected to increase to between 33% and 33.3% and adjusted free cash flow is expected to come in at $1.55 billion or more. Finally, EPS is expected to increase 10% to $5.29.
All of this means that Waste Connections will continue to have the resources to continue to grow, acquire, and return capital to shareholders investing in it.
Waste Connections dividend
This leads me to the dividend. Waste Connections stock is currently yielding a mere 0.7%. However, this does not mean that its dividend has not been healthy and growing.
In fact, Waste Connections shareholders enjoyed a 24% dividend growth rate in 2016, a 17% dividend growth rate in 2017, a 16% dividend growth rate in 2018, a 15.6% dividend growth rate in 2019, a 16% increase in 2020, a 2.9% increase in 2021, a 16% increase in 2022, an 11% increase in 2023, and a 14% increase in 2024.
I know, that went on and on. But I just wanted to highlight the type of annual dividend increases that Waste Connections has been able to implement. It’s quite impressive. So, to sum it up nicely, the dividend has grown every year in the last eight years, and at an average of 14.6% – a very attractive selling point for those considering investing in the stock.
The bottom line
I think we can expect more of the same for Waste Connections in 2025 – strong cash flows, shareholder returns, and increasing margins. This, in turn, will send Waste Connections stock higher in my view. So I would consider investing in it today.
