Waste Connections Inc. (TSX:WCN) is an integrated solid waste services company. It provides waste collection, disposal, and recycling services in the U.S. and Canada. It also provides a lucrative, defensive, and rapidly growing business for investors who are looking for dividends and growth.

Let's take a look at what's in store for Waste Connections stock in 2025.

Waste Connections stock: A quick review

The last 10 years have been exceptionally good for Waste Connections. In fact, they have been characterized by consistent growth, strong returns, and dividend increases. All of this as the company has continued to consolidate the fragmented waste market, increasing its scale and efficiencies.

In this time period, we have seen Waste Connections stock's annual dividend per share double to $1.76 – that's a more than 7% compound annual growth rate (CAGR). Also, we've seen the company's revenue increase 286% to just over $8 billion in 2023 – that's a CAGR of 14.5%. Finally, net earnings increased 211% to $727 million – that's a CAGR of 12%.

In the company's latest quarter, revenue increased 13.3% to $2.3 billion, as this year was a record year for acquisitions.

Waste Connections stock price continues to rally

In response to the company's stellar results, its stock price has performed exceptionally well. In fact, Waste Connections stock is currently trading at all-time highs. This stock price action reflects the company's very successful past, as well as the bright outlook in its future.

This outlook was evident from the latest results, as well as in management's 2024 guidance. This guidance includes revenue of $8.9 billion. This number is up $150 million from its original outlook, and it represents an 11.3% growth rate. In addition to this, the company expects strong cash flow generation in the year. Free cash flow is expected to come in at $1.2 billion, or 13.5% of revenue.

Looking ahead to 2025, the guidance remains strong, although growth rates are expected to slow. Revenue growth is expected to be in the mid to high single-digit range and adjusted earnings before interest, taxes, and depreciation (EBITDA) is expected to be in the high single-digit range. Also, free cash flow will be 45% to 50% of adjusted EBITDA. Above average margin expansion is expected in 2025.

The opportunity to consolidate the solid waste business remains big, as the industry is still highly fragmented. This leaves Waste Connections with the opportunity to continue with its successful consolidation strategy.

Where will the stock go from here?

As I mentioned, Waste Connections' stock price is trading at all-time highs. This is supported by very strong fundamentals, although the valuation is not cheap. But I like the fact that the company has been consistently outperforming expectations and remains a very strong cash generator with a strong balance sheet.

So, it's clear that the company is firing on all cylinders and has been for a long time now. But can it grow into its lofty valuation or is Waste Connections stock doomed to fall?

Well, it depends. If a general market downturn happens, then the downside could be significant for Waste Connections stock. But remember, the company is as defensive as they get, so a certain premium is justified. It seems very likely that the next few years will deliver more strong returns for the company. All things considered, I think that any stock price weakness would be a great opportunity to buy this stock.