2 High-Yield Dividend Stocks Just Got Kicked Out of the S&P 500. Is Either a Buy Now?
2026-07-04 12:15
•Micah Zimmerman •The Motley Fool
•••••• •• Axe Capital view
S&P 500 Exodus Opens Dividend Plays, But Are They Right for SA Investors?
Campbell's 7% yield and Pool Corp's rapid dividend growth look tempting, yet local relevance and rand dynamics warrant caution.
Campbell's (CPB) exit from the S&P 500 triggers a sell-off slump, compressing its valuation and inflating its rare 7% dividend yield. Its stable dividend history—51 years—and cash flow backed by the upward trajectory of the Rao's brand provide some comfort. However, slow dividend growth and consumer staples' relative inactivity in South Africa limit upside for rand investors, especially as CPB is dollar-denominated with no SA-listed proxy. Pool Corp (POOL), a niche player in pool supplies, boasts stellar 22-year dividend growth averaging 17% annually and resilience through recurring maintenance revenue. Yet, exposure to housing market cycles and weaker local consumer sentiment dampens enthusiasm. For South Africans, the stronger USD/ZAR dynamics might make these yields attractive in isolation, but exchange rate volatility and lack of local hedging instruments reduce practical appeal. Positioning to buy on dips is reasonable but should be coupled with vigilant FX risk management. this is just my opinion and not financial advice
I would watch CPB for opportunistic entry at more attractive levels while carefully monitoring USD/ZAR; POOL remains a hold for now, given its niche exposure and cyclical risks. Hedging currency risk is essential.
- CPB
- POOL
- USD/ZAR
- USD/ZAR volatility eroding rand returns
- Consumer spending softness impacting dividend sustainability
5/10
Campbell's Company and Pool Corporation were removed from the S&P 500 on June 22, triggering mechanical selling pressure. Campbell's offers a rare 7%+ dividend yield backed by 51 years of payments and the growing Rao's brand, though dividend growth has been slow. Pool Corp. features a more modest 2.4% yield but has raised dividends for 22 consecutive years at ~17% annually, supported by recurring maintenance revenue and digital platform growth.
This article was originally published by The Motley Fool and has been adapted here for Axe Capital Trading News.
Publisher: The Motley Fool
Author: Micah Zimmerman
Categories: Rates, Equities, Earnings, Capital Returns, Consumer, Retail
Tickers: CPB, POOL
Sentiment: Positive - Despite recent operational headwinds and slow dividend growth, the stock offers an attractive 7%+ yield backed by 51 years of consistent dividend payments, strong cash flow coverage, and the promising Rao's brand which crossed $1 billion in sales. The removal creates a temporary buying opportunity. Demonstrates exceptional dividend growth with 22 consecutive years of increases at ~17% annually, supported by recurring maintenance revenue (60% of sales), solid earnings growth (Q1 2026: 6% sales, 7% operating income growth), and emerging digital platform growth. Strong execution of dividend growth strategy despite housing market sensitivity.
Keywords: S&P 500 removal, dividend stocks, index rebalancing, high-yield dividend, dividend growth, consumer staples, pool supplies
Insights:
- CPB: Positive: Despite recent operational headwinds and slow dividend growth, the stock offers an attractive 7%+ yield backed by 51 years of consistent dividend payments, strong cash flow coverage, and the promising Rao's brand which crossed $1 billion in sales. The removal creates a temporary buying opportunity.
- POOL: Positive: Demonstrates exceptional dividend growth with 22 consecutive years of increases at ~17% annually, supported by recurring maintenance revenue (60% of sales), solid earnings growth (Q1 2026: 6% sales, 7% operating income growth), and emerging digital platform growth. Strong execution of dividend growth strategy despite housing market sensitivity.