Yesterday I sold out of my position in Archer Daniels Midland (ADM). I still like them long-term due to them being tied to food production which the need for that is only going to grow from here as the global population continues to expand; however, short-term I see issues that could possibly lead to a dividend cut. I figured it's better to regret the dividend growth going forward by getting out now rather than sticking around and having to deal with a dividend cut. I don't think it's definitely going to happen but after going through Avon's results that led to their dividend cut that shed some light on potential problems with ADM. Plus ADM was due for a raise with their last payout but did not increase it then.
I initiated my position in ADM back in August 2012 by picking up 35 shares for $25.73 and after one dividend payment that brought in another 0.229 shares my total cost basis was $914.64. I sold all of my shares for $29.09 each giving me a profit of $102.22. This is a 11.18% return with a 11.93% total return from the original purchase. This is going to reduce my forward 12-month dividends by $24.66 so I'm not too worried about being able to find an adequate replacement.
The reason I sold out of the position is their FCF is very shaky. In all honesty I probably shouldn't have purchased the shares to begin with but luckily it turned out that I was able to get a pretty nice return.
Their FCF has been all over the place since 2001 and has me a little worried about their prospects over the next few years so I decided that I should part ways and find something else to invest in. If their operations clean up over the next few years I wouldn't mind jumping back in if the price is right.