RSG has valuation risk due to high forward PE relative to moderate earnings growth.

And then finally, we come to RSG, Republic Services, who announced a 7.2% dividend increase. But take a look at these 10-year returns. It's up over 323%. Obviously, that's not including dividends.

And if we look in the last year now though, we've seen a bit of a pullback. So, what's the source of that pullback? Well, we'll get to that in just a moment, but let's go ahead and take a look at those dividend metrics.

And what you'll see is free cash flow has grown substantially, easily covering those dividend payments, a very healthy free cash flow payout ratio. So, again, what I want to get back to is what has the source of this decline been because it's clear the yield is exceedingly safe.

At just 1.25%, the dividend will continue to grow at a fair rate as well, at about 7.2%.

Well, the reason we've seen a decline is primarily the valuation multiple. Because look at earnings and free cash flow. Earnings per share, revenue per share, and especially free cash flow per share have grown substantially.

So, anytime you're seeing growth like that and you see a stock declining in its share price, I know it sounds obvious, but it means there's been a decline in the valuation multiple.

And look at this. This company is still trading at a forward PE multiple of 29.51. That's quite expensive for a stock that has earnings estimates in the 10 to 9% range over the next few years.

That's certainly very solid earnings growth, but it's expensive for a stock with a 29 to 30 PE multiple.

So, why are they trading at this type of valuation? Well, the reality is the market is looking for companies that they deem recession proof, AI proof. And Waste Management and RSG are those exact type of businesses.

There's certainly opportunities for them to be enhanced by AI, but they're not going to be disrupted. And so, as a result, the market is willing to pay a premium.

Even if the business model's intact, the dividend is very safe and growing, there's always valuation risk. And I do think, to be honest, there is a little bit of valuation risk with that PE multiple.

And obviously, that's somewhat the case as we've seen the stock decline 7.6% over the last year despite the fact free cash flow is still growing rapidly.