Republic Services, Inc. RSG is benefiting from the expansion of its recycling volume and operational efficiency, which lowers fleet operating costs. This stock is highly attractive to investors who seek regular dividends. However, liquidity concerns weigh on the company and rising fuel costs are worrisome.

RSGreported impressive second-quarter 2024 results. Earnings per share (excluding 1 cent from non-recurring items) of $1.6 beat the Zacks Consensus Estimate by 5.2% and increased 14.2% from the year-ago quarter. Revenues of $4 billion beat the consensus mark by a slight margin and gained 8.6% year over year.

How is Republic Services Doing?

RSG is anticipated to ride on ongoing trends, such as rising environmental concerns, rapid industrialization, growing population and active government measures to lower illegal dumping. The company continues to focus on expanding its recycling volume via enhanced material handling processes and programs. One of the improvements that it has made is the development of the first Polymer Center in 2023 to increase the recycling volume of plastics across the North American region.

Republic Services is focused on augmenting its operational efficiency and lowering the operating costs of the fleet by shifting to compressed natural gas (CNG) collection vehicles. In 2023, around 20% of the company’s recycling and solid waste collection fleet operated on CNG, and 13% of its replacement recycling and solid waste vehicle purchases were CNG vehicles.

RSG constantly rewards its shareholders through dividend payments and share repurchases. In 2023, 2022 and 2021, the company repurchased shares worth $203.5 million, $252.2 million and $650 million, respectively. It paid out $261.8 million, $592.9 million and $552.6 million in dividends in 2023, 2022 and 2021, respectively.

Some other stocks that consistently pay dividends are Waste Management, Inc. WM and Rollins, Inc. ROL. WM paid out dividends of $1.2 billion, $1.1 billion and $970 million in 2023, 2022 and 2021, respectively. ROL paid out $264.3 million, $211.6 million and $208.7 million in dividends in 2023, 2022, and 2021, respectively.

We are impressed by RSG’s strategy to pay out dividends and conduct share repurchases since it boosts shareholder morale and attracts potential investors, driving the bottom line.

Meanwhile, Republic Services might struggle with liquidity issues as the current ratio (a measure of liquidity) at the end of the second quarter of 2024 was 0.59, which declined from 0.76 in the second quarter of 2023. A current ratio of less than 1 indicates that the company may have problems paying off its short-term obligations.