Take Waste Management (WMI), the largest trash collection and disposal company in America… which is up 10.3% since I last recommended it at $25.25 on March 18th… that is nothing… I think there is still plenty of upside in this stock because it has achieved accidentally high yielder status… let’s go over what that means… with companies that pay dividends, dividend yield shrinks as the share price increases, and the yield rises as the share price falls… when a stock with a so-so dividend falls far enough, that the yield crosses above 4%… and right now Waste Management yields 4.2%… in our book, it becomes an accidentally high yielder… it is accidental, because Waste Management did not get such a high yield by raising its dividend endlessly… those are intentionally high yielders… rather its yield grew large because the stock fell… at its 52 week high, Waste Management only yielded, well a little bit less than 3%…. not puny, but not big enough to recommend.

Now, though, we have a chance to buy a company that has a double digit long term earnings growth, something Wall Street cannot get enough of, and be paid a nice 4.2% dividend for owning it… which is slightly more than you would get for owning long term US Treasuries, before taxes and considerably more after you give the IRS its due, as the tax rate on dividends is very favorable, just 15%… speaking of Waste Managements dividend, the next quarterly payout is coming up in a month on June 19th… that is a .29 cent a share dividend right in your pocket as long as you own the stock at the right time.. when do you need to buy the stock before it becomes too late to snatch that big dividend… now you always hear a ton of confusing Wall Street jibberish whenever you read about the actual process of collecting a dividend… so lets cut thru that… let me make it really simple for you… do not get confused by terms like the ex-date or the record date, the only thing that you need to know is the term the must own date… that is what we call it here, the must own date… the last day that you have to buy the stock and still collect the next dividend… you must own it by this date… and the must own date happens to be the day before the ex-date, which the company will announce when it declares its dividend.

Now, we know that Waste Management’s ex-date is May 28th, that is a week from Thursday… so the must own date is May27th… I need you in ahead of that to get the dividend… now, one of the best things about accidentally high yielders is that their dividends to be Olivia in “Marathon Man” like, no need to break out the Novocain or even the clove oil to break yourself for a dividend cut… Waste Management is no different… its annual payout of $1.16 should eat up about 53% of Waste Management’s estimated $2.19 earnings per share for 2010... hey, that is tons of protection… the dividend should take up less than half of the earnings… but Waste Management comes pretty close… and should generate more than enough free cash flow to pay the dividend 2.3 times over in 2009, so we are feeling real comfortable.

You know why we like Waste Management’s dividend, but what about the business… how is that going… okay, Waste Management is doing pretty well… even in a recession we still need to take out the trash… trash volumes are down though… but, prices are up 2.6% across the company… and total collection is up 4% even though the volume has decreased by 8%… it has also increased the environmental fee that it charges from 4.2% to 6%, to pass on increased costs to its customers… lets take a longer term view… the company seems to have re-priced half of its long term landfill contracts with 5 to 10% price increases… and it is also benefiting from the fact that its commercial collection and roll off customers have been using smaller waste containers… they think that it is a trade down, but those actually carry higher prices per cubic yard.

After listening to various banking consults, and this is really important for timing, I am now fairly convinced… and I also got this from listening to home builders… fairly convinced that commercial and residential construction activity in Florida which has been totally trashed, to belabor the metaphor, is actually getting better at last… given that the Southeast has been a big part of the earnings issue that has sent this great stock down from the $30’s to the $20’s, any reversal of that negative condition could spur the stock right back up to its old levels… and I am telling you that I smell a reversal, and it is not just trash that I smell.

And now management is looking to go on a shopping spree… $250m to acquire solid waste companies… another $250m to acquire waste to energy plants… $200m to acquire medical waste over the next two years… I like this, now is a great time to be a buyer… since even after we have moved up significantly from the bottom in March… stock prices are still very far off of their old highs… and Waste Management can probably get away with paying much less for these acquisitions than it would have had to a year ago… we know David Steiner, the companies very pro-share owner CEO, walked away from a larger deal not long ago because it would have cost too much… that was so smart… it would have hurt shareholders… he is our kind of guy… he actually cares about how his existing shareholders do.

Here is the bottom line…