Are WM Stock Investors Happy, or Did They Miss Out?

WM (NYSE: WM) is the top trash hauler and landfill operator in North America, but that doesn't necessarily mean its stock is a top performer. And if it isn't, aren't investors almost obligated to make plenty of "trash" jokes about its performance?

Here's how the company, formerly known as Waste Management, has been doing for investors recently, and what it tells potential investors about this industrial stalwart.

Image source: Getty Images.

One year: WM stock is pretty smelly

Unfortunately, the past year hasn't been a good one for WM's stock, thanks to a 10% drop in December 2024 and another sharp drop in late October. However, if you factor in the company's substantial dividend (which currently yields about 1.5%) and assume the dividends are reinvested into the stock, you get the company's "total return," which is a slightly less-bad negative 3.2%.

However, the negative return is only part of the overall story. You also have to factor in the opportunity cost of not having invested in better-performing stocks, and that's where things really start looking rough for WM. Because the S&P 500 (SNPINDEX: ^GSPC) has grown 13% over the past year (or 15% on a total return basis), WM's performance is even worse by comparison.

Investors who bought WM stock a year ago probably aren't happy, because they're losing out to the broader market by 8.4 percentage points, or 11.8 percentage points on a total return basis.

But that's not the whole story...

Three years: Downright stinky

Unfortunately, WM stock's poor performance over the last year ruined a pretty good 2023 and 2024. An investment in the company from Dec. 1, 2022, is up a solid 29.6%, or a more impressive 36.1% on a total return basis over the past three years.

However, the S&P 500 is still badly beating WM's returns during that period. It's up 67.1%, or an impressive 75.3% on a total return basis, over that same three-year time frame. But at least investors have made some money on their investment over those three years.

Does an extra two years make any difference at all?

Five years: Maybe don't throw out the trash just yet...

In fact, two years make a sizable difference.

WM shares still lose out to the broader market on both an absolute and a total return basis, but it's a lot closer. Waste Management shares are up 82.2% over the last five years, or 98% on a total return basis, while the S&P 500 is only up 88.4%, or 103.6% on a total return basis, meaning WM only trails by about six percentage points by either metric.

Better still for WM investors, the company's returns were clearly outperforming the S&P 500 for much of that time frame, only slipping in the past couple of months.

This is why it's important to look at a long-term investment from multiple perspectives. If we only took the current snapshot in time, we might think that WM stock was a perennial underperformer, but for many investors (including those who have held it for even longer periods), the stock has been a clear market-beater.

As a slow-growing dividend stock, WM is one that demands patience from investors, but has been a reliable outperformer over the long term.

John Bromels has positions in WM. The Motley Fool recommends WM. The Motley Fool has a disclosure policy.