Waste Management is a single company

Veolia or Waste Management? Which “rubbish” shares could fit better in the portfolio!

I don't know about you, but I am sometimes a little overwhelmed with the abundance of stocks. In terms of finding out which securities I should include in my portfolio. Many German investors make it easy for themselves and, for example, only rely on domestic stocks. But this is too boring to say the least. Because especially abroad there are sometimes excellent investment opportunities.

But even there, the range of interesting stocks is almost unmanageable. And the selection of industries in which one can invest is also quite diverse. One area that many investors may not have on their radar is waste management. Reason enough for us today, with Veolia and Waste Management, to take a closer look at two stocks from this segment and analyze which of the two stocks could be the better buy.

A brief overview

Although both companies are active in the waste disposal sector, there are fundamental differences between them. While the US group Waste Management has a market capitalization of the equivalent of almost 42 billion euros, the French company Veolia only has a market value of just under 10 billion euros. So the Americans have a market value four times higher.

However, if you look at the sales achieved in 2019, the opposite picture emerges. Here Veolia is clearly ahead with 27.2 billion euros. Waste Management was only able to post a turnover of 15.5 billion US dollars (approx. 13.2 billion euros) last year. However, almost 11% of sales remained as profit for the American group. With its French competitor it was significantly less at 2.8%, which could be booked as profit from sales.

Let's look at profit sharing

One thing that is very important to many investors is the dividend. What about our two candidates? Let's take a look at the facts here.

In my opinion, Waste Management is more than convincing when it comes to dividends. A distribution has only been paid out since 1998, but it has been increased on a regular basis since 2004. And in the last ten years alone, it has increased from 1.26 US dollars to currently 2.18 US dollars per share. Overall, this corresponds to an increase of 73%.

We see a slightly different picture here at Veolia. The company also pays a dividend, but unfortunately there are no regular increases to be seen here. But on the contrary. This year, shareholders received EUR 0.50 per share, roughly the same as in 2004, when it was EUR 0.55 per share. However, it should also be mentioned that from 2008 to 2011 there was a higher dividend of 1.21 euros per share. Unfortunately, the group was unable to keep this level constant.

A look at the price development

As can already be suspected, there is also a larger difference in the price development of both stocks. If you take a look at the chart over the past ten years, it quickly becomes clear what I mean.

Unfortunately, anyone who invested in Veolia shares during this period could not increase their capital. While Veolia's shares were quoted at EUR 20.11 on October 15, 2010, they are currently only trading at EUR 17.71 in Paris (October 16, 2020). Unfortunately, this results in a negative return for the investor with a minus of a good 12%.

And what about here at Waste Management? Much better, I would say. In October 2010, the share was still available for $ 36.61 (October 15, 2010). Currently, however, it costs 115.87 US dollars (October 16, 2020) in New York, almost 216% more than then. As an investor, you could more than triple your stake here.

Conclusion

As is easy to see, Waste Management papers could be a much better choice for investors. Americans are much larger in terms of market value and are also more profitable. In addition, there is a steadily increasing dividend and a share price trend like out of a picture book. Unfortunately, the competitor Veolia cannot keep up here. If waste management is not too dirty for you, you can take a closer look at the Waste Management share.

The post Veolia or Waste Management? Which “rubbish” shares could fit better in the portfolio! appeared first on The Motley Fool Germany.

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Andre Kulpa has no position in any of the stocks mentioned. The Motley Fool recommends Waste Management.

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