SCI

Service Corporation International is the scaled leader in North American deathcare (funeral and cemetery services), a defensive business with highly predictable demand tied to mortality rather than the economic cycle. FY2025 was characteristically steady: revenue grew 2.9% to $4.31B, operating income rose 5.4% to $978M (a strong 22.7% operating margin), net income increased 4.6% to $543M, and diluted EPS grew 7.6% to $3.80 — outpacing net income thanks to a 3.5% reduction in share count. Return on equity of 33.1% is excellent (flattered by a small, buyback-depleted equity base, but indicative of genuinely high returns on the underlying business).

Capital allocation is a core part of the appeal: SCI returned cash via $461M of buybacks (up 81.7% YoY) and $184M of dividends (up 5.3%), funded by $943M of operating cash flow. The model also benefits from a large preneed backlog supported by affiliated trust funds, which earned strong combined investment returns (15.1% in 2025). The flip side is balance-sheet leverage — $5.08B of long-term debt against just $1.64B of equity — and exposure to trust-fund market values, where a severe decline could require the company to replenish funds or record charges (though as of December 31, 2025, no such charge or replenishment was required).