Last Friday I sold out of my small position in Waste Management (WM). It's a shame to see them leave my portfolio since they were one of the first stocks that I bought but I can't justify holding a position for sentimental reasons if it's not performing how I'd like. I wasn't thrilled with what I heard in the conference call and the last 2 dividend increases have been pretty paltry with 4.41% and 2.82% increases. I'd be fine if that was a high yielder between 6-8% but with a current yield of 3.60% that just won't cut it. Plus the P/E ratio is 23+ currently which seems way high for a slower grower like WM.
As I mentioned, this was a small position. I purchased 10 shares of WM in August 2011 for $29.94 per share with a cost basis after commission of $30.74. That was one issue with buying such a small position the commission added almost a $1 to my cost basis, not very smart. I had reinvested 5 dividend payouts over the life of the position which added an extra 0.536 shares and received two payouts in cash for a total of $7.25. All in all my total return before taxes for the WM holding was 37.78% good for a 20.8% annualized rate.
I still like WM and wouldn't mind picking shares back up in the future if the dividend growth begins to accelerate. For now though I figured it was time to part ways. I really like what the business model because it's essentially a local monopoly where they have landfills because of the regulations and permits required for new landfills. No one wants to have one in their community unless they are hurting for revenue. There is a WM landfill not too far from my house and when you drive by it in the heat of the summer the stench is rather awful.