Updated 3/10/25
GFL Environmental Inc. is a fast-growing waste management company making a name for itself in North America. Competing with industry giants, GFL has expanded rapidly through acquisitions, fueling its rise in the market. The stock has gained strong momentum over the past year, but for those focused on dividends, the key question is whether GFL is a solid income investment or if its payout is too small to matter.
Key Dividend Metrics
📈 Forward Dividend Yield: 0.12%
💰 Forward Annual Dividend Rate: $0.06 per share
📊 Payout Ratio: 53.10%
📆 Last Dividend Paid: January 31, 2025
⏳ Ex-Dividend Date: January 13, 2025
At a glance, GFL’s dividend is barely noticeable. The yield is far lower than what most income investors look for, and while the payout ratio is reasonable, it doesn’t offer much in the way of passive income.
Dividend Overview
For those who rely on dividends, GFL doesn’t stand out. The company only recently started paying dividends, and at just six cents per year, it’s clear that management is focused on reinvestment rather than shareholder returns. Waste management businesses typically generate steady cash flow, which makes them reliable dividend payers. However, GFL is taking a different path compared to well-established players that consistently increase dividends over time.
Instead of rewarding investors with higher payouts, GFL is pouring its resources into acquisitions and debt management. While that may work out in the long run, anyone looking for a steady income stream will find little to get excited about here.
Dividend Growth and Safety
Looking at the sustainability of GFL’s dividend, there are some mixed signals. On paper, a payout ratio of just over 50% suggests the dividend is manageable. But a deeper dive reveals some concerns.
- Profit Margin: -9.19% (negative earnings mean the company is still losing money)
- Return on Equity: -10.10% (poor profitability compared to peers)
- Total Debt: $10.55 billion (high leverage can limit dividend growth)
With negative earnings per share (-$1.48 TTM) and an overall lack of profitability, GFL isn’t exactly in a strong position to be a long-term dividend payer. It’s true that the company has strong cash flow, with over $1.5 billion in operating cash flow last year. However, once debt payments and reinvestments are accounted for, there isn’t much left to significantly raise the dividend in the near future.
Chart Analysis
Price Action and Trend
GFL has been in a steady uptrend over the past year, with notable acceleration starting around mid-year. The stock saw a significant breakout after a period of sideways movement, pushing above both its 50-day and 200-day moving averages. Since then, the 50-day moving average has been acting as dynamic support, while the 200-day moving average remains in a steady upward slope, confirming the overall bullish trend.
More recently, there has been some choppiness in the price action, with the stock pulling back slightly from its highs but still managing to hold key support levels. The latest close at 46.83 suggests continued strength, though short-term volatility is evident.
Moving Averages
The relationship between the 50-day and 200-day moving averages provides a strong indication of trend direction. The 50-day moving average remains above the 200-day, reinforcing the stock’s bullish momentum. However, the price has been testing the 50-day moving average in recent weeks, showing signs of potential consolidation.
A key observation is that the stock is trading well above its long-term 200-day moving average, signaling that the broader trend remains intact. As long as the price stays above this level, the longer-term outlook remains positive.
Volume and Buying Interest
Volume spikes have been visible at several key points, particularly around breakouts and pullbacks. The largest volume surges have coincided with strong upward price movement, indicating institutional buying interest. Recent volume, however, has been more moderate, suggesting that traders may be waiting for confirmation before making their next move.
The past few trading sessions have seen a slight increase in volume, especially on up days, which could indicate renewed buying pressure. If volume continues to pick up alongside price increases, it could be a sign that the stock is gearing up for another leg higher.
Relative Strength Index (RSI)
The RSI has been hovering in the upper range, but it has cooled off slightly from previous overbought conditions. This suggests that while the stock was potentially overheated in earlier months, it has since worked off some of that excess momentum.
Currently, RSI is sitting at a level that indicates neutral-to-slightly bullish momentum. It is not in extreme overbought territory, meaning there could still be room for upside. However, if RSI starts trending downward sharply, it may signal a loss of momentum or the beginning of a deeper pullback.
Recent Candle Formations
The past five candles have shown a mix of buying and selling pressure, with some long wicks on both ends. This kind of action suggests indecision in the short term, with buyers and sellers battling for control. The most recent candle closed near its high of the day, which is generally a positive sign, but follow-through in the next few sessions will be crucial in determining whether the stock continues to push higher or struggles at resistance.
Analyst Ratings
📈 Upgrades:
🔹 Jefferies Financial Group 🏆 – Recently, Jefferies analyst Stephanie Moore raised the price target for GFL Environmental from $52 to $55, keeping a Buy rating. The adjustment came after GFL’s Investor Day, where management laid out an optimistic but achievable plan for revenue growth and margin improvements. The analyst noted that GFL’s guidance seemed conservative, leaving room for potential outperformance.
🔹 Citigroup 🚀 – Earlier this year, Citigroup initiated coverage on GFL Environmental with a Buy rating and a price target of $53. The firm pointed to GFL’s strong positioning in the waste management sector and its ability to scale through strategic acquisitions. Analysts believe the company’s long-term growth prospects justify its valuation, even as it continues integrating recent deals.
📉 Downgrades:
🔸 BMO Capital Markets ⚠️ – BMO recently downgraded GFL from Outperform to Market Perform, trimming the price target from $43 to $42. The firm raised concerns about GFL’s high debt load and the challenges of smoothly integrating its latest acquisitions. While BMO still sees growth potential, analysts worry that leverage could become a hurdle if economic conditions tighten.
🔸 Bank of America Securities ❗ – Earlier this year, BofA Securities moved GFL from Buy to Neutral, setting a price target of $35. The downgrade was largely due to valuation concerns, as GFL’s stock had already seen strong appreciation. Analysts expressed caution over the stock’s risk-reward profile, suggesting that a pullback could create a better entry point for investors.
🎯 Consensus Price Target:
Currently, the average 12-month price target for GFL Environmental stands at $49.78, with estimates ranging from $42 to $54. That represents an expected upside of approximately 5.97% from its current price of $46.97.
While some analysts remain bullish on GFL’s growth trajectory, others highlight financial risks and valuation concerns, making it a stock that requires careful consideration depending on an investor’s risk tolerance.
Earning Report Summary
GFL Environmental Inc. wrapped up 2024 with a solid performance, showing steady revenue growth and improved margins, but also reporting a larger net loss. The latest earnings report gives a clear picture of where the company stands and what’s ahead for 2025.
Fourth Quarter Highlights
Revenue for the last quarter of the year came in at about $1.99 billion, up 5.5% from the same time last year. If you take out the impact of businesses GFL sold off, the real growth was closer to 8.2%. The core waste management business was the biggest driver, pulling in $1.57 billion, with higher pricing and stronger volumes contributing to the gains. The environmental services segment, which includes industrial waste solutions, brought in $414 million—slightly lower than last year due to a one-time surge in business the company had in 2023.
Profitability looked better on an adjusted basis, with adjusted EBITDA climbing 17.4% to $578 million. That pushed the EBITDA margin up to 29.1%, a meaningful improvement over last year’s 26.1%. Even with these gains, GFL still posted a net loss of $199.5 million for the quarter, a wider loss than the $62 million it reported in the same period last year. Cash flow from operations was strong, but free cash flow was a little lower than last year due to heavier spending on capital projects.
Full Year Performance
For the entire year, GFL’s total revenue reached $7.86 billion, growing 4.6% compared to 2023. Taking out businesses it sold, organic growth was closer to 8.8%. Waste management made up most of the revenue, with core pricing up by 6.5%, though volume saw a small dip. Environmental services also posted a modest increase, though last year’s numbers were inflated by a few big, one-off projects.
Adjusted EBITDA for the year was up 12.3% to $2.25 billion, improving the company’s overall margins. But despite strong operational performance, GFL ended the year with a net loss of $737 million. A large portion of that came from non-cash accounting adjustments tied to asset sales.
Looking Ahead to 2025
GFL is forecasting revenue of about $8.42 billion for 2025, with solid waste services expected to grow by around 5.5% on a core pricing basis. The company also expects environmental services to grow by nearly 9% organically.
The outlook also factors in some impact from mergers and acquisitions, though the overall contribution is expected to be slightly negative as the company fine-tunes its portfolio. Currency exchange rates could provide a small boost, particularly with GFL’s operations spanning both the U.S. and Canada.
Overall, the numbers show a business that’s growing steadily but still working through some financial challenges. The strong revenue and EBITDA growth are encouraging, but the persistent net losses highlight areas where GFL still has work to do. The company’s 2025 guidance suggests it remains confident in its pricing strategy and operational improvements, but investors will be watching closely to see if the trend toward profitability continues.
Financial Health and Stability
From a financial perspective, GFL is carrying a heavy debt load. The company’s debt-to-equity ratio sits at 146%, which is far higher than what’s typically considered healthy. For a business that requires significant capital expenditures, having access to debt is necessary, but too much leverage can make growth—and dividends—harder to sustain.
Additional financial highlights:
- Current Ratio: 0.54, indicating potential liquidity issues
- Total Cash: $133.8 million, a small amount compared to total debt
- Revenue Growth: 5.5% year over year, showing moderate expansion
The company’s ability to keep paying even a small dividend will depend on how well it can manage its debt and improve profitability. If earnings remain in the red, the dividend won’t be a priority for management, and it’s unlikely to see meaningful growth.
Valuation and Stock Performance
GFL’s stock has performed well, significantly outperforming broader markets over the past year.
- 52-Week Performance: Up 34.38%
- 52-Week High: $48.87
- 52-Week Low: $30.57
- Current Price: $46.63
On the valuation side, the stock appears expensive:
- Forward Price-to-Earnings (P/E): 57.47, which is high compared to competitors
- Price-to-Sales (P/S): 3.24, suggesting investors are paying a premium for revenue
- Price-to-Book (P/B): 3.77, which is on the higher end for the industry
At its current levels, GFL is being valued as a growth stock rather than an income stock. Investors buying in at these prices are paying for potential future expansion, rather than reliable income. Given its high valuation and moderate revenue growth, there’s a risk that expectations could be ahead of reality.
Risks and Considerations
🔺 High Debt Load – With over $10 billion in debt, GFL is highly leveraged. If interest rates rise or refinancing becomes difficult, the company could feel significant financial strain.
🔺 Lack of Profitability – GFL remains unprofitable, which is a concern for income investors. If earnings don’t improve, there’s little reason to expect meaningful dividend growth.
🔺 Minimal Dividend Yield – A 0.12% yield is practically nothing in the world of dividend investing. There are plenty of other options that provide more income.
🔺 Acquisition Strategy Risks – GFL has aggressively expanded through acquisitions, which can be risky. If these deals don’t generate expected synergies, profitability could take a hit.
🔺 Expensive Valuation – With a forward P/E above 57, GFL is priced for rapid growth. If that growth slows down, the stock could be vulnerable to a pullback.
Final Thoughts
For anyone focused on dividends, GFL isn’t a top choice. The company’s yield is minimal, and future dividend growth is uncertain as management prioritizes reinvestment. While waste management is generally a strong sector for income investing, GFL is still in an expansion phase and isn’t yet focused on rewarding shareholders with significant payouts.
That’s not to say the company doesn’t have potential. If it can improve profitability and manage its debt load effectively, it could one day become a solid dividend payer. But for now, those seeking consistent income will likely find better opportunities elsewhere.
This stock is built for growth-focused investors, not dividend investors. If reliable income is your goal, there are stronger options to consider.
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