Two stocks that turn garbage into profit

Waste management is big business because Americans make a lot of waste. According to the EPA Americans generated 251 million tons of garbage in 2012 and recycled about 34.5% of it or 87 million tons. That leaves 164 million tons of garbage added to landfills across the country in just one year.

There are ways to take that unrecycled garbage and make something else out of it ... energy.

The best example of this is in Sweden where they turn 99% of their waste into energy and actually import garbage from other countries to keep 32 “Waste to Energy” plants operating.

Sweden, of course, is a much smaller country than the United States, so 99% may be a lofty goal in the land of red, white and blue. Still, that hasn’t stopped some waste management companies from trying their hand at it here.

Dani Hughes of Divine Capital likes two such companies, not just because they are good stewards of the planet and the economy but also because they are solid investment opportunities.

“Republic Services (RSG) is doing it,” she says. “They’ve got a dividend to pay you to wait and that’s really what I like about this space. It hasn’t taken off and given us the returns we’d like to see like the S&P has given us over the past year or two, but it's paying us to wait and they are doing the right thing for our economy, our world.”

Republic Services says they collect about four million tons of recyclable garbage every year. They also operate 76 landfill-to-gas facilities across the country that convert the gas escaping from traditional organic waste in landfills into energy.

She also likes is Covanta (CVA). “They have three lines of business,” Hughes notes. “They get paid to take your waste off your hands, they get paid for ... plugging energy into the grid and they also get paid for taking metals that come out of this recycling process and selling those metals.”

According to Covanta’s website the company’s “facilities in North America convert 20 million tons of trash annually into 9 million megawatt-hours of clean, renewable energy and create more than 9 billion pounds of steam sold to a variety of industries.”

As Hughes noted, these stocks won’t make you rich tomorrow. She says they are big infrastructure plays, so it takes time and money to generate returns, but "they make a lot of sense.”

More from Yahoo Finance:
How Jessica Alba is turning Honest Company into a billion-dollar baby
Lululemon leaping, Blackberry snags startup, Gogo climbing on T-Mobile deal
Goodell, NFL in fight to save public image as Rice scandal deepens

Advertisement