The Money Tree

Safely Generating Income in Retirement

New Trade – WM

Posted by mounddweller on September 30, 2012

Fellow Traders,

I executed a couple new trades this week.  First up let’s talk about Waste Management (WM).  As you probably know WM is the largest waste hauler and recycling company in North America.

I have been keeping an eye on WM for quite some time as I would like to add some shares to my long-term holding portfolio.  What I like about it from that perspective is (1) it’s market leader position, (2) it’s sizeable and growing dividend, and (3) it’s a ‘can’t live without it’ service.  It’s a market leader in that it is over 50% larger than it’s nearest competitor, Republic Service Group.  It’s dividend of $1.42 has grown almost 50% in the past five years.  With Friday’s closing price of $32.08, that’s a yield of 4.42%.  Last, but not least, it operates in an industry we can’t live without.  Everyday, in every household in the country, we generate a large amount of garbage which must be desposed of.    Waste Management does a great job of fulfilling that basic need.  Better yet, they take our trash and turn it into cash by recycling commodities and generating energy from our decomposing garbage.

Lately WM has been trending down and is now trading at support around $32.  It’s 52-wk high is $36.35 and the low is $29.77.  I think $32 is a fair price at which to begin accumulating shares so earlier this week I sold to open (STO) 3 OCT $32 puts at $0.40.  My plan is to sell 3 more puts at the $30 strike if it fails to hold at the $32 support.  I’ll sell another 3 at the $28 strike if the weakness persists.

One final note, I traded WM twice late last year, selling puts at the $28 strike price without having them put to me.  If they get that low again, I will be a buyer.



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