Recycling: Doing Good AND Making Money
Reuben is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
When you think about recycling, the first thing that comes to mind is probably cleaning out a nasty tuna can and tossing it into a green bin. Or piling newspapers in a corner until recycling day (I personally recommend using those nifty handled paper bags that Trader Joe's has for collecting your paper recycling. Sorry, but I have no good ideas for the tuna can). Both of these examples are great for living up to one's civic duty to save the environment, but have you ever wondered if there was a way to make money off of recycling? The answer is yes, both directly and by taking a broader view of the topic.
To benefit directly from recycling, one need look no further than trash hauler turned recycling king Waste Management (NYSE: WM). The company has a storied, though checkered, past, but for many years has been going through a major transition in the way it views its business. Once upon a time the company just picked up rubbish and dumped it off at a landfill, but the fairy tale ending is that the company is now focusing on benefiting from the trash it hauls by recycling. Indeed, it actually goes through the trash and “salvages” what can be used again, after proper processing, of course. It has also been a pioneer in turning landfills into “power plants” using the emissions that landfills create as fuel. Its financial performance of late has been relatively weak, but it is shifting its model so that it is providing more extensive services to customers, including the ability for a town's residents to put all of their recyclables into just one co-mingled container. Recent price weakness could present an entry point into a company that is truly changing the face of refuse. Adding to the allure is a dividend yield hovering around 4.5%.
“New to You”
Looking a little more broadly at the whole recycling concept, you might consider buying used instead of buying new. For example, if you need a new shirt you could go to Goodwill and pick up a “new to you” shirt instead of one off the rack at your local mall. If this doesn't interest you, how about buying shares in eBay (NASDAQ: EBAY) or CarMax (NYSE: KMX)?
Ubiquitous eBay doesn't actually recycle anything itself, but it allows its users to swap old stuff for cash with willing buyers via its auction service, taking a cut along the way. Although eBay's Paypal subsidiary is becoming increasingly important to its business, the auction site is still the industry leader. CarMax, meanwhile, owns used car lots. Think about all of the metal and plastic that goes into a car and how much better it is to sell that car to a new owner over sending it to a scrap yard. The company has over 100 “super centers” and it looks like there is plenty of room to grow in this fragmented market. Sadly, neither of these companies pay a dividend, though they may still interest recycling inclined investors.
Renovating Old Properties
Whitestone REIT (NYSE: WSR) generally buys strip malls that have been neglected in some way and then strives to re-develop them to increase their value. It focuses on what it calls Community Centered Properties, which it defines as “visibly located properties in established or developing culturally diverse neighborhoods.” Management pays particular attention to the local communities in its re-development efforts, often focusing on smaller, service-oriented tenants. Its primary markets are Arizona and Texas, though it also has a small presence in Illinois. It is a very small REIT, managing just a fraction of the properties of other REITs that own strip malls. However, its small size allows it to deal in properties with which the big fish wouldn't even bother. Of course being small comes with risks, too, but the over 9% yield, paid monthly, would seem to be ample compensation. For a deeper review of Whitestone, you can read my previous article covering its strengths and weaknesses.
Doing Good AND Making Money
If you are an investor and like the idea of recycling, you can do a lot more than just clean your cans. Indeed, you can make some money off of the inherently beneficial concept of reusing perfectly good things, particularly if you expand your view just a little bit. If you happen to buy, or already own, any of the stocks above, don't tell people you just picked up Ebay, say you just picked up one of the biggest internet based recyclers around!
ReubenGBrewer has no positions in the stocks mentioned above. The Motley Fool owns shares of Waste Management. Motley Fool newsletter services recommend eBay and Waste Management. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!