Here's How You Could Lose Money With Trump 2.0 in 2025

WEST PALM BEACH, FLORIDA – NOVEMBER 06: Republican presidential candidate, former US president… [+] Donald Trump arrives to speak during an election night event at the Palm Beach Convention Center on November 6, 2024 in West Palm Beach, Florida. Americans voted today in the presidential race between Republican former President Donald Trump and Vice President Kamala Harris, as well as several national elections that will determine the balance of power in Congress. (Photo by Chip Somodevilla/Getty Images)

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We're drowning in post-election stock market predictions, so let me add another one to the pile:

This new administration will hurt the returns of people who simply buy an index fund like the SPDR S&P 500 ETF Trust (SPY Principal Shareholder Yield Index ETF SPDR S&P 500 ETF Trust) and stop using it.

I call the ticker SPY Americas because, well, most Americans own them. If you're reading this, chances are you are too.

Now, I'm not going to judge (well, maybe I will, but just a little!).

Suffice it to say that the next presidential term will usher in a true stock-picking market, at a time when careful moves in and out of individual dividend payers will be essential.

This puts holders of SPY, which must represent the current composition of the S&P 500 index, in a difficult situation. Since it doesn't have a manager who can buy and sell as markets move (a big reason we prefer actively managed CEFs over ETFs), SPY holders are stuck as losing stocks cancel all or part of the ETF winners.

This is already happening.

Let's review six tickers worth removing from your wallet before the new administration is sworn in (besides SPY, of course!).

Food and drug stocks will decline as we move toward Trump 2.0

Let's start with RFK Jr., President-elect Trump's choice to lead the Department of Health and Human Services. This nomination, if confirmed by the Senate, would be clearly negative for two market segments: food stocks and drug manufacturers.

RFK has been a vocal critic of the pharmaceutical industry. He wants alternative therapies and treatments, which are not patentable by drug manufacturers. It also seeks to overhaul the way clinical trials are conducted and aims to lower drug prices, which is good for consumers, not so much for drug company profits. And finally, he strongly criticized processed foods, including artificial colors used in breakfast cereals and other snacks.

That puts vaccine maker Moderna (MRNA) at the top of our list to avoid, along with big food stocks like General Mills (GIS) and The Kraft-Heinz Co. (KHC), a company we've long criticized for its gap. over time, and fast food manufacturers like McDonalds (MCD).

Since we invest for dividend growth, we naturally avoided these four elements. MRNA, for its part, yields 0% today, while General Mills' payout growth has fallen sharply, increasing by just a penny over the past year.

McDonald's, of course, is still recovering from its E outbreak. coli and additionally pays out 73% of its free cash flow (FCF) as dividends, well above my 50% safe line. This is another drag on future payments growth.

KHC's Reverse Dividend Magnet Sinks Its Stock

KHC? Its 5.2% dividend yield might catch your eye, but that high yield only exists because the stock has plunged 59% over the past decade (and stock prices and dividend yields move in opposite directions).

KHC's last dividend action was actually a cut announced in early 2019, which resulted in a decline in the stock price. This is proof positive that our dividend magnet, the tendency for dividend growth to propel stock prices higher, also works in reverse.

Add to that revenue growth that has gone nowhere for the better part of a decade and a dividend that is 65% of KHC over FCF's trailing 12 months, and the odds are that this payout will take off and give a boost to the share price. , are thin.

This is a good place to return to SPY because, yes, all four stocks we've talked about so far are owned by the US ticker. And they are far from alone on our sales list. Beyond food and pharmaceutical stocks, there is another category of S&P 500 taxpayers that we want to avoid in the coming months: those with significant exposure to China.

Chinese tariffs are no fun for these 2 toy makers

Look, I know there's some debate about whether the president-elect's tariff negotiations are a real threat or a way to bring other countries to the negotiating table. But the smart money is predicting higher tariffs on Chinese exports to the United States.

Economists polled by Reuters expect tariffs of 40%, below the 60% demanded by Trump. But of course, this (like all predictions) should be taken with a grain of salt.

But it's fair to say that companies that still source largely from China will likely suffer the consequences. Two that particularly worry me are toy makers Mattel (MAT) and Hasbro (HAS).

This duo is not only at risk due to higher tariffs. Demographic changes are also a problem, as people are having fewer children, particularly in wealthier countries. In 2023, for example, there were just under 3.6 million births in the United States, according to the Centers for Disease Control and Prevention, the lowest number since 1979.

To be clear, I have to say that both companies deserve credit for their efforts to shift production away from China. Mattel recently announced the closure of a factory in the country. And during its first-quarter earnings conference call, CEO Ynon Kreiz said the company now gets about 50% of its products from China, although he says that figure is declining.

As for Hasbro, according to the WSJ, it buys around 40% of its products from China, with the aim of reducing this proportion to 20% within four years. It remains a heavy dependency, and you and I both know that reshoring a large part of a supply chain doesn't happen overnight.

Additionally, Hasbro makes the bulk of its sales (67% in the third quarter) from its consumer products segment, which houses 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 sales of its eOne film and television business. This was directly linked to a 10% drop in consumer product sales.

The dividend? Sure, its yield today is 4.5%, but it hasn't gone anywhere since before the pandemic.

Mattel, for its part, is off our list for the same reasons as Moderna: it does not pay a dividend, after having suspended its payment in 2017.

Ultimately, the tides turned against these two, and there's no sign of that changing anytime soon. Further Chinese sanctions will only weigh on their stocks and, by extension, our SPY holders' returns.

Brett Owens is chief investment strategist for Contrarian Outlook. For more great income ideas, get your free copy of his latest special report: Your Early Retirement Portfolio: Huge Dividends Every Month Forever.

Disclosure: none

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