We are now officially into Trump 2.0, and here’s the first thing I can tell you:
This new administration will hurt the returns of folks who simply buy an index fund like the SPDR S&P 500 ETF Trust (SPY) and call it a day.
What we’re now embarking on is a true stock picker’s market—a time when prudent moves into, and out of, individual dividend payers will be key.
That puts holders of SPY, which has to represent the current makeup of the S&P 500 index, in a tough spot. Since it has no manager who can buy and sell as markets shift, SPY holders are locked in as losing stocks cancel out some or all of the ETF’s winners.
It’s already happening.
Let’s run through five tickers worth pruning from your portfolio now that Trump has taken the oath of office (in addition to SPY, of course!). I’ve also got one, further on, that’s not related to the new administration—but you should sell or avoid it anyway, a recent (frankly brutal) decision by management.
Food Stocks to Fade at the Dawn of Trump 2.0
Let’s start with RFK Jr., President Trump’s choice to head the Health and Human Services department. The appointment—should it be confirmed by the Senate—is a clear negative for food stocks like General Mills (GIS) and The Kraft-Heinz Co. (KHC), the latter of which we’ve long criticized for being out of step with the times. Fast-food makers like McDonald’s (MCD) are also in a tough spot here.
So it’s no surprise that all three have dropped since Election Day, at a time when the S&P 500 is up. I don’t expect a recovery anytime soon.
Food Giants Drop on Trump 2.0 Countdown
Since we’re investing for dividend growth, we’ve naturally avoided these three. General Mills, for example, has seen its payout growth slow sharply, rising by just a penny last year:
General Mills’ Dividend Was Decelerating Before the Election
McDonald’s has recently made headlines for moving away from DEI programs. That might be music to the new administration’s ears, but it does nothing to change the fact that MCD pays a high 73% of free cash flow (FCF) as dividends, well over my 50% “safety line.” That’s another brake on future payout growth.
KHC? Its 5.6% dividend yield might grab your attention, but that high yield only exists because the stock has plunged sharply in the last decade (and share prices and dividend yields move in opposite directions).
The last move KHC’s dividend made was actually a cut announced in early 2019, which took the share price down with it. That’s proof positive that our Dividend Magnet—or the tendency for dividend growth to propel share prices higher—also works in reverse:
KHC’s “Reverse Dividend Magnet” Sinks Its Stock
Throw in revenue growth that’s gone nowhere for the better part of a decade and a dividend that accounts for a high 65% of KHC’s last 12 months of free cash flow (FCF), and the chances of this payout getting off the mat, and giving the share price a lift, are slim.
This is a good spot to wheel back on SPY because, yes, all three of the stocks we’ve talked about so far are held by “America’s ticker.”
Beyond food and drug stocks, there’s another category of S&P 500 dividend payers we want to avoid in the months ahead: those with a lot of China exposure.
China Tariffs Will Be No Fun for These 2 Toymakers
One thing there’s no doubt about: Higher tariffs are coming—and companies that still source a lot of product in China, particularly, will take a hit. Two I’m particularly worried about are toymakers Mattel (MAT) and Hasbro (HAS).
This duo aren’t only at risk due to higher tariffs. Demographic changes are also an overhang, with people having fewer children, especially in wealthier countries. In 2023, for example, there were just under 3.6 million births in the US, according to the Centers for Disease Control and Prevention, the fewest since 1979.
To be clear, I should say that both companies deserve credit for their efforts to shift production away from China. In May of last year, Mattel said it’s closing a plant in the country. And in its first-quarter 2024 earnings call, CEO Ynon Kreiz said the firm got about 50% of its products from China at that time, though he said this number is falling.
As for Hasbro, according to the WSJ, it gets around 40% of its products from China, with the goal of cutting that to 20% in the next four years. That’s still a significant reliance, and you and I both know that relocating big parts of a supply chain isn’t something that happens overnight.
Moreover, Hasbro gets most of its sales (67% in the third quarter of 2024) from its consumer-products segment, home of its physical toys and games—even as more kids get their fix online.
You can see the results in the company’s third-quarter revenue, which fell 9%, excluding the sale of its eOne movie and TV business. That was tied to a 10% drop in consumer-products sales.
The dividend? Sure, it yields a high 5% today, but it’s gone nowhere since before the pandemic:
Hasbro’s Payout Growth Breaks Down
Mattel, for its part, is off our list because we’re dividend investors first and foremost, and MAT doesn’t pay a dividend, having suspended its payout in 2017.
The bottom line is that the winds have shifted against these two, and there’s no sign of that changing. Further China sanctions will only weigh on their stocks—which are both well below where they were on Election Day. That’s not only bad news for MAT and HAS—but for our SPY holders, too.
Finally, This Ski-Resort Operator Is Also a Sell
Our last stock isn’t directly tied to Trump 2.0, but I’m mentioning it because its dividend yield has shot up to 4.8%, so it might catch your eye.
I’m talking about Vail Resorts (MTN), which owns popular resorts like Whistler Blackcomb in British Columbia to Breckenridge, Colorado, its namesake Vail resort in Colorado, as well as eastern favorites like Stowe, Vermont. It also owns ski spots in Europe.
Already, investors who hold Vail are putting their dividends at the whim of the weather. That’s never a good idea, particularly these days. I’m also worried about Vail’s payout ratio: In the last 12 months, dividends have accounted for 105% of FCF, which is clearly unsustainable.
But the real reason why it’s time to put Vail on ice is management’s recent decision to refuse ski patrollers’ demands for a wage increase at its resort in Park City, Utah. The move created long lift lines and limited the amount of skiable terrain. The backlash from skiers pummeled the company’s reputation on social media.
The demands, which were relatively modest, slashed Vail’s share price from the strike’s start on December 7 to January 7, when a tentative agreement was reached:
Bad Decision Crumples MTN Stock
Even though the strike is settled, management’s bad move here leaves us with little confidence in them. Add that to a payout that’s outrunning free cash flow and you get two very good reasons to sell.
The Dividend Magnet: Our Roadmap for Trump 2.0
There’s one “truth” we can count on in the very early days of this new administration: A stock’s dividend growth is—and will always be—the No. 1 driver of its share price.
That makes our Trump 2.0 strategy simple: Buy stocks with payouts that aren’t only growing but accelerating—and make sure these companies have the rising sales, earnings and cash flow to keep that growth coming.
Even better if we can grab stocks whose share prices “lag” their payout growth. Then we can ride along as those stocks “snap back” to their dividends.
This is easier said than done, of course: To track dividend/share price correlations, we need complex charting tools and a lot of time to pore over annual and quarterly earnings reports.
But not to worry: I’ve done the legwork for you here. The result is my 5 top “Dividend Magnet” picks for 2025 and Trump 2.0, which I’m urging all investors to buy now.
These 5 stocks have what it takes to keep their share prices—and payouts—popping over the next 4 years. I don’t want you to be without them. Click here for more on these 5 undervalued “Dividend Magnet” picks and get a free Special Report revealing their names and tickers.