This Resilient Dividend Stock Is Crushing the Market This Year. Time to Buy?

By Daniel Sparks – Mar 20, 2026 at 8:42PM ESTKey PointsWaste Management's revenue grew 7.1% to $6.31 billion in its most recently reported quarter.The company's full-year adjusted operating EBITDA margin exceeded 30% for the first time last year.The stock commands a premium valuation, leaving little margin of safety.It has been a turbulent start to 2026 for many investors. As of this writing, the S&P 500 is down about 5% year to date. But amid this broader market weakness, shares of Waste Management (WM 1.11%) have been a bright spot. The environmental services giant's stock is up more than 5% so far this year. And it's easy to see why investors have flocked to the shares. The company provides an essential service, generates massive cash flow, and routinely rewards its shareholders with dividend increases -- a compelling value proposition during times of uncertainty. Is the stock's recent outperformance a sign it's time to buy? Or has the market already fully priced in the company's strong fundamental execution? Image source: Getty Images. A resilient business model Waste Management's latest quarterly update showed a business that is navigating the current macroeconomic environment with ease. In Q4, the company's revenue reached $6.31 billion -- up 7.1% year over year. A significant portion of this top-line jump was driven by robust pricing power in its collection and disposal business, as well as a meaningful boost from its recent acquisition of Stericycle. Now operating as WM Healthcare Solutions, the newly integrated business contributed $615 million to the company's fourth-quarter revenue. But what is perhaps more impressive than Waste Management's revenue growth is its expanding profitability. The company's adjusted operating earnings before interest, taxes, depreciation, and amortization (EBITDA) margin expanded to 31.3% in Q4 -- up from 28.9% in the year-ago period. Further highlighting this operational efficiency, the adjusted operating EBITDA margin for its legacy business expanded 150 basis points to 31.5% for the full year. In addition, Waste Management's total adjusted operating EBITDA surged 15.5% last year. Even more, the company's full-year adjusted operating EBITDA margin exceeded 30% for the first time in its history. And this operational efficiency is translating directly into cash generation. The company's free cash flow, or its cash flow from operations less capital expenditures, jumped nearly 27% last year to $2.94 billion. In addition, WM's bottom line remains robust, with Q4 earnings per share coming in at $1.83 -- up sharply from $1.48 in the year-ago period. A dependable dividend For income-focused investors, Waste Management's ability to consistently generate cash supports a very reliable dividend. The company's board of directors recently indicated its intention to increase the annual dividend to $3.78 per share. At the stock's current price, that yields about 1.5%. While a 1.5% yield might not seem significant at first glance, the payout is incredibly secure. Waste Management's payout ratio sits at about 50%, meaning the company is distributing only about half of its adjusted earnings to shareholders as dividends. This leaves plenty of wiggle room for management to continue increasing the payout in the coming years, even while funding its robust capital expenditures plans. ExpandNYSE: WMWMToday's Change(-1.11%) $-2.60Current Price$231.23Key Data PointsMarket Cap$94BDay's Range$230.15 - $235.0052wk Range$194.11 - $248.13Volume63KAvg Vol2.2MGross Margin29.08%Dividend Yield1.46% Where it gets challenging So, the business is growing, margins are expanding, and the dividend is safe. Why not buy the stock today? The primary hurdle is valuation. As of this writing, Waste Management trades at a price-to-earnings ratio of about 34. For a mature, capital-intensive business in the waste and recycling sector, that is a steep premium. At this valuation, the stock arguably already prices in a successful integration of its recent acquisitions and continued margin expansion over time. These are, of course, possible outcomes. But I'd rather wait to see if I can buy the stock when best-case scenarios already seem largely priced in. Put simply, the stock may be priced for perfection today. Waste Management is undoubtedly an exceptional business with a durable competitive advantage. And for investors who already own the stock, the safe dividend and strong cash flow make it a great company to hold through market volatility. But for those looking to deploy fresh capital, I believe the lack of a margin of safety makes the stock more of a hold than a buy right now.Read NextMar 20, 2026 •By Parkev Tatevosian, CFARising Oil Prices Might Cause Recession in the U.S. 1 Defensive Stock You Can Buy to Lower RiskMar 16, 2026 •By James BrumleyThese 3 Industrial Stocks May Outperform the S&P 500 in 2026Mar 10, 2026 •By James Brumley1 Magnificent Industrial Stock to Buy and Hold ForeverJan 17, 2026 •By Josh Kohn-Lindquist2 Magnificent S&P 500 Dividend Stocks Down 10% and 14% to Buy Right Now for 2026Nov 22, 2025 •By John BromelsWhat Every Waste Management Investor Should Know Before BuyingNov 13, 2025 •By Will EbiefungHere's 1 Top Dividend Stock to Buy and Hold ForeverAbout the AuthorDaniel Sparks is a contributing Motley Fool stock market analyst covering technology, industrials, financials, and consumer goods. Daniel is the owner and chief investment officer of Sparks Capital Management. He holds a master’s degree in business administration from Colorado State University. The Globe and Mail profiled him and his investing philosophy in an article titled, “This stock picker is outperforming nearly everybody else. Here’s how he is doing it.”TMFDanielSparksX@sparks_capitalStocks MentionedWMNYSE: WM$231.23(-1.11%)-$2.60*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.