Q. I'm a long-time shareholder of Waste Management Inc. Please advise on the prospects. — PM, via the Internet

A. The largest US garbage hauler and landfill operator is in a sturdy business that withstands recession better than most, generates lots of cash and has long-term growth.

Nonetheless, no business is perfect.

A slow economy reduces overall waste volume by companies and individuals; cut-rate pricing has been common as competitors have battled to gain market share; and there is potential for labour disputes with unionised workers.

Waste Management shares, with a dividend yield of 3.8 percent, have been relatively flat in price this year following last year's six percent increase. First-quarter earnings were up 17 percent as commodity prices rose, volumes grew and pricing power improved.

Disastrous events requiring significant waste removal efforts, such as the oil spill in the Gulf of Mexico and the mid-Atlantic floods, are expected to add somewhat to profit margins for this company and others in its industry.

Meanwhile, the recently-introduced Bagster is Waste Management's first retail product. This durable woven bag is for do-it-yourselfers and remodelers for whom a traditional dumpster is too large. It can hold up to three cubic yards of debris and 3,300 pounds. Available in 38 US states and Canada at home improvement and hardware stores, the new product has a $29.95 suggested price. Consensus analyst rating of Waste Management shares is "buy", according to Thomson Reuters, consisting of four "strong buys", three "buys" and four "holds."

With nearly 20 million corporate and residential customers, Waste Management is the nation's largest provider of collection, transfer, recycling, disposal and waste-to-energy services. More than half of its revenue comes from its waste collection business. The company's primary competitor is Republic Services.

This firm, founded in 1894, recently acquired a medical waste processing facility from Milum Textile Services Co. in Phoenix; launched a landfill-gas-to-energy facility to generate electricity in Savannah, Georgia; and received government approval for a facility for the same purpose in Ottawa, Canada.

David Steiner, the firm's CEO, recently added the role of president to his duties when president and COO Larry O'Donnell left to pursue other management opportunities. Steiner previously served in numerous top positions at the firm.

Earnings are expected to increase six percent this year compared to the seven percent forecast for the waste collection and recycling industry. Next year's projected increase is 13 percent vs. 16 percent expected industry-wide. The expected five-year annualised gain of nine percent compares to 13 percent projected for its peers.

Q. Is Fidelity Dividend Growth Fund worth keeping in my individual retirement account, or should I switch funds? — BF, via the Internet

A. Since taking charge in 2008, experienced and respected manager Larry Rakers has transformed the fund's portfolio from highly concentrated to broadly diversified. That's a good thing.

The $8.2 billion Fidelity Dividend Growth Fund is up 34 percent over the past 12 months to rank in the top five percent of large growth and value funds. Its three-year annualised decline of seven percent places it in the upper one-fourth of its peers.

Financial services represents nearly one-fifth of the fund's assets, with other concentrations in industrial materials and energy. Top holdings were recently Wells Fargo Co., Microsoft Corp., JP Morgan Chase & Co., Bank of America Corp., Cisco Systems Inc., ExxonMobil Corp., PNC Financial Services Group Inc., Hewlett-Packard Co., Merck & Co. Inc. and Oracle Corp.

Andrew Leckey answers questions only through the column. Address inquiries to Andrew Leckey, 555 North Central Avenue, Suite 302, Phoenix, Arizona 85004-1248, or by e-mail at andrewinv@aol.com

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