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Something in the overall stock market has been getting attention lately: the consumer’s search for value. That preference is also driving market activity. CNBC’s Jim Cramer has been exploring this trend extensively lately, identifying companies that could benefit from the changing times.
In Mad Money he called it the consumer rebellion, but now he’s added a new term: the Great Broadening. It refers to a move away from the “Magnificent Seven” that has driven so much of the S&P 500’s gains over the past year. “The market has fallen out of love with the seven,” Cramer said.
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But if the market turns away from Big Tech, where does it go? The broadening includes a wide range of stocks he’s been watching. He mentions McDonald’s (NYSE:MCD), which reported lower sales and profits despite the popularity of its $5 value meal. Cramer said no one was particularly disappointed by McDonald’s numbers. He may be right. While the stock is down about 10% for the year, it quickly recovered from the decline after the earnings report. 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, saying instead, “I want to take a closer look at how do we free up capacity from the investment that we’re already making, and can that be more streamlined and effectively redeployed to top-line growth? And that’s really a big focus of mine.” Since that earnings call, the stock is up more than 21% and more than 38% for the year, despite looming concerns about the PFAS lawsuits facing 3M. 3M has a current dividend yield of 2.24% and an annual payout of $2.80.
Another candidate for Cramer’s big broadening is pharmaceutical giant Bristol Myers Squibb (NYSE:BMY), which raised its guidance on the strength of its drug portfolio and better-than-expected sales of Revlimid. The stock has risen more than 12% since its earnings release but has fallen more than 21% over the past year. Analysts remain divided on whether the company’s fundamentals have truly shifted. Like 3M, Bristol Myers Squibb has a new CEO, which may be part of the reason for the renewed enthusiasm. Bristol Myers Squibb has a dividend yield of 4.90% and an annual payout of $2.40.
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In addition to the three stocks, Cramer also noted a strong rise in S&P Mid-Cap 400 banks and the performance of regional banks such as First Financial Bankshares (NASDAQ:FFIN) and SouthState Corp (NYSE:SSB). He also cited opportunities for homebuilders and home improvement companies that could benefit from lower interest rates and renewed interest in home purchases.
The overall conclusion for investors is that the past doesn’t always predict the future. Tech has had a fantastic run thanks to the generative AI boom, but investors now want to see a return on investment for all that spending. The big broadening could mean that some dividend stocks that have languished in recent years could see a glory day.
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This article by Jim Cramer says: Get Ready for the Big Broadening: What It Means for Dividend Stocks? originally appeared on Benzinga.com
