Avoid Delta, Starbucks and Disney for Now, Columnist Says

ETF Trends columnist Kelly Green advises investors to avoid buying Delta Air Lines, Starbucks and Walt Disney now because each stock’s dividend yield falls below her 3.5% buy threshold. She will monitor pricing, product differentiation and new fare classes to track shifts in consumer spending in a K-shaped economy.

Green cited data showing the top 10% of earners account for about 49.2% of U.S. consumer spending and identified the three companies as examples where firms are testing higher-priced offerings or tiered products aimed at different income groups.

Delta Air Lines recently introduced three pared-down premium fares-First Basic, Delta Premium Select and Basic Business-that preserve cabin seating while reducing perks such as advance seat assignment, award miles, checked-bag allowances and upgrade eligibility. CEO Ed Bastian has indicated fares will remain elevated even if energy costs decline. Delta reported quarterly revenue of $17.7 billion, up 14% year over year and at the high end of management guidance. Shares are up about 25% year to date. The carrier’s quarterly dividend of $0.215 yields roughly 1%.

Starbucks CEO Brian Niccol has described a visit to the chain as roughly a $9 premium experience and has emphasized a service-focused approach. The company has reintroduced self-serve condiments, brought back handwritten cup notes and set an internal target to cut order wait times to four minutes or less. Starbucks reported global same-store sales growth of 6.2% year over year and consolidated revenue up 9% in the most recent quarter. The company is developing in-house software intended to replace about $400 million in annual vendor payments. Shares have risen roughly 27% year to date. The quarterly dividend of $0.62 equates to an annual yield near 2.3%.

Walt Disney’s business mix allows different pricing by product. Experiences such as parks, resorts, cruises and theme-park merchandise account for about 46% of Disney’s revenue, direct-to-consumer streaming services about 41% and traditional cable and broadcast about 12%. Experiences revenue grew about 7% in the latest quarter and total operating income slightly exceeded management guidance. Ticketing and access options already include tiered passes and VIP services alongside standard admission. Shares are down about 14% year to date and Disney’s semiannual dividend payment of $0.75 implies a yield near 1.5%.

Green recommends against adding any of the three stocks to an income-focused portfolio now because none meets her 3.5% dividend-yield cutoff. She plans to continue monitoring how pricing experiments, product segmentation and operational changes affect consumer behavior, corporate margins and dividend outcomes.