The recovery of the housing market benefits a wide range of businesses. Some of them are a bit less obvious, such as trash haulers.
Construction crews continue to break ground on a rising number of new homes, and applications for new construction, a good barometer of future activity, reached a five-year peak in April. That all adds up to more garbage at work sites to be hauled away. When those homes are occupied, there will be even more garbage. The improving economy should also lead to the creation of more small businesses, which are among the waste industry's most lucrative customers.
Even so, it could be a while before investors see big improvements in the bottom line of these companies. Executives from Republic Services, a waste disposal company, told financial analysts at a recent conference that increases in trash-hauling volumes generally lag about a year behind improvement in housing starts. Analysts say it won't be until 2014 that Republic Services and others return to double-digit growth in earnings per share.
But in the meantime, investors can bide their time collecting the relatively big dividends that waste companies pay. Republic Services, Waste Management and Progressive Waste Solutions all have dividend yields higher than the 2.2 percent of the Standard & Poor's 500 index.Associated Press