It’s true. You can secure a 6% starting dividend yield if you join Sam’s club.
You’re likely unaware of the offer. It hasn’t been promoted. Most brokers and advisors are oblivious to its existence.
I know what you’re thinking, but the dividend and its high yield isn’t offered by THAT Sam. You won’t find it at the massive retail chain or its Sam’s Club subsidiary.
This offer emanates with a different Sam – Sam Zell.
Though less famous than the Sam of Walmart (NYSE: WMT) fame, our Sam, nevertheless, is worth knowing.
Sam Zell is the founding father of publicly traded real estate – the REIT market you know today.
Zell founded Equity Group Investments in 1968. Over his 51-year real estate investing career, Zell has amassed a $5 billion fortune.
Zell is still active today.
He’s board chair of Equity Residential (NYSE: EQR), an apartment REIT, and Equity LifeStyle Properties (NYSE: ELS), a manufactured home community and recreational vehicle resort REIT. Both are the largest REITs of their kind.
Zell branched beyond real estate in 2000. He bought controlling shares of Anixter International (NYSE: AXE), a maker of specialty wire and cable, on the cheap following the internet-bubble burst in 2000. Zell is Anixter’s chairman and largest shareholder.
Solid investments all, but you won’t find Sam’s 6% dividend yield lurking in those investments. You’ll need to venture to another investment in which Zell serves as board chairman.
Covanta Holding Corp. (NYSE: CVA) is the investment. Zell is Covanta’s board chairman. He’s also its largest shareholder, with a 10% ownership stake.
Covanta is small compared to the other companies. Its equity market cap is a mere $2.3 billion. But it’s big when it comes to the Covanta dividend. Its $1-per-share annual dividend is twice that of Equity Residential. It’s three times Equity LifeStyle’s.
The business sets Covanta further apart from the others.
Covanta provides waste and management services to municipal clients. Its core business is to own and operate infrastructure to generate energy from waste (EfW).
With over 50 facilities around the world, Covanta is a leader in EfW solutions. It dominates the market, accounting for 70% of the EfW industry.
Environmentalists should like the business. Covanta helps keep the planet a little cleaner. Its facilities convert approximately 21 million tons of waste into enough renewable energy to power more than one million homes.
Post-recycled municipal solid waste generated in the United States is approximately 250 million tons. Covanta has room to grow.
Ridding the municipalities of waste accounts for 73% of Covanta’s $1.88 billion in annual revenue. Selling the energy produced by burning waste accounts for 18%. It generates additional revenue from the sale of metals recovered during the process. (The company recycles over 600,000 tons of metal annually.)
If you’re an investor, you’ll like the business. Covanta fills a portfolio niche. Many income investors lack alternative-energy exposure in their income portfolios. (Let’s face, legitimate income choices are few and far between.)
Our niche is filled only if sufficient income is available to investors. Sufficient income is available. It’s also sustainable.
Covanta began paying a regular quarterly dividend in 2011. The Covanta dividend has been increased four times over the period.
Given the rise in revenue in operating cash flow in recent years, a fifth increase in the Covanta dividend could come sooner than later. Of course, you’ll need to be a Covanta shareholder (Sam’s club member) to collect it when it comes.