Jim Cramer Says Get Ready For The Great Broadening: What Does This Mean For Dividend Stocks
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Something in the overall stock market has been commanding attention lately: the consumer’s quest for value. That preference is also driving market activity. CNBC’s Jim Cramer has been exploring this trend in great detail lately, identifying companies that might benefit from the changing times.
On Mad Money, he has called it the consumer rebellion but now he has added a new term: the great broadening. This refers to a move away from the “Magnificent Seven” that has driven so much of the S&P 500’s gain over the past year. “The market has fallen out of love with the seven,” said Cramer.
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But if the market is moving away from Big Tech, where is it going? The broadening encompasses a wide variety of stocks he is keeping an eye on. He cites McDonald’s (NYSE:MCD) which reported lower sales and earnings despite the popularity of its $5 value meal. Cramer said that no one was really disappointed by the McDonald’s numbers. He may be right. Although the stock is down around 10% for the year, it rebounded from its post-earnings dip quickly. McDonald’s has a dividend yield of 2.56% and an annual dividend payout of $6.68.
Cramer also mentioned 3M (NYSE:MMM) and its new CEO, Bill Brown. Brown spent much of 3M’s recent earnings call talking about cutting costs and the benefits of restructuring. Brown stressed that he wasn’t ready to talk about research and development, instead saying, “I want to look harder at how do we free up capacity of the investment we make already today, and can that be more streamlined and redeployed effectively on top-line growth? And that’s really a big focus of mine.” Since that earnings call, the stock is up over 21% and over 38% for the year despite the looming concern over the PFAS lawsuits that 3M is facing. 3M has a current dividend yield of 2.24% and an annual payout of $2.80.
Another candidate for Cramer’s great broadening is pharmaceutical giant Bristol Myers Squibb (NYSE:BMY), which raised its guidance due to the strength of its drug portfolio and the better-than-expected sales of Revlimid. The stock rallied over 12% since the earnings release but is down over 21% for the past year. Analysts remain conflicted on whether the company’s fundamentals have really shifted. Like 3M, Bristol Myers Squibb has a new CEO, which may be part of the reason for renewed enthusiasm. Bristol Myers Squibb has a dividend yield of 4.90% and an annual payout of $2.40.
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Beyond these three stocks, Cramer is also paying attention to a sharp rise in the S&P Mid-Cap 400 banks and the performance of regional banks like First Financial Bankshares (NASDAQ:FFIN) and SouthState Corp (NYSE:SSB). He also mentioned opportunities for homebuilders and home supply companies that could benefit from lowering interest rates and a renewed interest in home purchases.
The overall take-away for investors is that the past does not always predict the future. Tech has had a fantastic run due to the generative AI boom, but investors now want to see the return on investment for all that spending. The great broadening could mean that some dividend stocks that have languished in recent years may have glory days ahead.
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