If you're looking for a great dividend stock that is rewarding shareholders with a dividend increase this holiday season, you're in the right place. WM (WM -6.22%), formerly known as Waste Management, offers investors a powerful combination of a strong business with undeniable competitive advantages and an attractive quarterly cash payment to shareholders. The company just announced a fresh dividend increase, adding to its history of consistent growth.

Let's take a closer look at why investors should love WM's dividend.

A durable business model

As North America's largest waste management environmental solutions provider, WM boasts 260 landfills across the U.S. and Canada. This means it possesses critical North American infrastructure, giving WM a key competitive advantage; the barriers to entry into the landfill business are significant. "Landfills are a scarce resource with a rising cost structure," management explained in the company's investor presentation in July. 

WM's scale in waste management also means it benefits from efficiencies across collection, transfer, landfill, and recycling. It uses its growing financial resources to expand by acquisition. As of this summer, it had completed 88 acquisitions over the past five years, bringing in $560 million of incremental annualized revenue.

In addition, WM's recession-resilient revenue sources mean the company generates consistent and substantial cash flow. Trailing-12-month free cash flow was close to $2 billion despite the company spending an impressive $2.5 billion on capital expenditures.

With all of this in mind, it's no surprise the company is able to pay investors a steadily increasing dividend.

Robust dividend growth

Earlier this month, WM reminded its shareholders of its dividend-paying prowess. The company announced a 7.7% dividend increase. The increase will mark the company's twentieth consecutive year of rate hikes.

Looking ahead, more increases are likely. WM is currently paying out less than half of its earnings in dividends. A payout ratio of 47% means the company has plenty of wiggle room for more hikes in the future.

Furthermore, investors have to look at the company's share repurchase program as well to fully appreciate management's prioritization of returning cash to shareholders. In its Dec. 8 announcement about a dividend increase, the company also said its board authorized another $1.5 billion for share repurchases, following the full utilization of its previous $1.5 billion authorization for 2022.

Perhaps the strongest case for continued dividend growth from WM is the company's growing business. Revenue has been rising nicely recently, increasing nearly 9% year over year in the third quarter and about 13% during the trailing-nine-month period ending on Sept. 30.

Progress on profitability has been even more impressive; adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 11% in the company's most recent quarter. Its momentum, explained WM CEO Jim Fish in the company's Q3 earnings call, has been driven by "Organic revenue growth, diligent management of controllable costs, and proactive steps to automate the business..." 

For what it's worth, analysts are optimistic about continued earnings growth from WM. On average, they expect the company's earnings per share to compound at a rate of nearly 12% annually over the next five years. 

WM shareholders will likely see more meaningful dividend growth for years to come.