Delta, Starbucks and Disney: Three Stocks I Wouldn’t Buy Yet — But Would Watch Closely

• U.S. consumer spending is becoming increasingly divided by income.
• Delta, Starbucks and Disney are adapting to changing consumer spending habits.
• Investors should watch these stocks for consumer trends, not dividend yields.

The U.S. consumer is no longer moving in one direction.

While wealthier Americans continue to spend on travel, premium coffee and entertainment, lower-income households are becoming increasingly sensitive to prices. That divide could become an important signal for investors watching corporate earnings, consumer demand and dividend sustainability.

This is the idea behind the increasingly popular term “K-shaped economy.”

Rather than the entire economy moving together, two groups are moving in opposite directions. Higher-income consumers are still spending, while lower-income households are cutting back or trading down.

According to Moody’s Analytics, the top 10% of earners now account for 49.2% of total U.S. consumer spending. That concentration raises an important question: What happens to companies if consumer spending becomes increasingly dependent on wealthier households?

For investors, three familiar names offer an interesting way to watch this trend unfold: Delta Air Lines, Starbucks and Disney.

I am not calling any of them buys right now. Their dividend yields simply do not meet the threshold I normally look for.

But their businesses could provide valuable clues about where consumer spending is heading.

The K-Shaped Economy Is Changing Consumer Behavior

The K-shaped economy describes a situation where different parts of the population experience very different economic outcomes.

Higher-income consumers can continue spending on premium products and experiences, while lower-income consumers may delay purchases, trade down or avoid discretionary spending altogether.

For companies, this creates a difficult balancing act.

They can focus on affluent customers and accept that some consumers will be priced out. They can introduce cheaper versions of their products. Or they can create different pricing tiers that allow customers to choose how much they want to spend.

That is exactly what makes these three companies interesting.

Delta Is Testing Whether Customers Will Trade Down

Delta Air Lines is experimenting with a new approach to premium travel.

The airline introduced basic versions of some of its premium cabin offerings, including First Basic, Delta Premium Select and Basic Business.

Customers can still sit in premium cabins and receive some of the associated benefits, but they give up certain perks such as advance seat selection, some reward miles, baggage allowances and upgrade eligibility.

The strategy essentially asks a simple question:

Will consumers pay for the premium experience even if they have to sacrifice some of the extras?

That could become increasingly important as airlines deal with a consumer base that is becoming more divided by income.

Delta also recently reported record quarterly revenue of $17.7 billion, representing a 14% increase and landing at the upper end of management’s expectations.

The company’s shares are up about 25% year to date, while its $0.215 quarterly dividend translates into a yield of roughly 1%.

That is not enough for me to consider the stock a dividend buy.

But I will be watching its next earnings report closely to see whether these cheaper premium fares gain traction.

Starbucks Is Betting on the Premium Experience

Starbucks presents another interesting case.

CEO Brian Niccol recently described a Starbucks visit as roughly a $9 premium experience. The challenge is convincing customers that the experience is worth the price.

That appears to be the foundation of the company’s “Back to Starbucks” strategy.

The company is bringing back features such as self-service condiments and handwritten cup notes while also trying to reduce customer wait times to four minutes or less.

The goal is not simply to sell coffee.

It is to make the entire experience feel valuable enough to justify the price.

So far, the strategy appears to be gaining traction. Starbucks recently reported global same-store sales growth of 6.2% year over year, while consolidated revenue increased 9%.

The company is also reportedly developing internal software using AI, potentially reducing the roughly $400 million it spends annually on software vendors.

Starbucks shares are up about 27% this year, but its $0.62 quarterly dividend represents an annual yield of only around 2.3%.

Again, that falls below my preferred dividend threshold.

Still, Starbucks could be an interesting indicator of whether consumers are willing to keep paying for affordable luxuries even when household budgets become tighter.

Disney Shows the Growing Divide in Entertainment

The Walt Disney Company provides perhaps the clearest example of different consumer experiences existing under the same brand.

Disney’s experiences business includes theme parks, resorts, cruises and consumer products. It represents roughly 46% of the company’s revenue.

And Disney has plenty of ways to separate customers based on their willingness to spend.

At its theme parks, consumers with deeper pockets can pay for premium passes and VIP experiences designed to reduce waiting times.

Budget-conscious visitors, meanwhile, can find themselves spending hours in queues for popular attractions.

That pricing structure is essentially the K-shaped economy playing out inside a theme park.

The interesting question for investors is whether Disney can continue increasing revenue by extracting more spending from affluent customers without alienating everyone else.

The experiences segment grew 7% last quarter, while total operating income modestly exceeded management’s guidance.

However, Disney shares remain under pressure, down roughly 14% year to date as investors worry about challenges facing both its theme parks and streaming business.

Its $0.75 semiannual dividend translates into a yield of only about 1.5%.

So, once again, it is not a dividend buy for me.

What These Three Companies Could Tell Investors

Delta, Starbucks and Disney operate in completely different industries.

But they are all dealing with the same underlying question:

How much are consumers willing to pay for a premium experience when the economy is becoming increasingly divided by income?

Delta is testing cheaper ways to access premium cabins.

Starbucks is trying to make its products feel worth the premium price.

Disney is offering different levels of experiences depending on how much customers are willing to spend.

These strategies could work if higher-income consumers continue spending strongly.

But if economic pressure eventually spreads to wealthier households, companies that rely heavily on premium spending could face a different challenge.

The Bigger Signal for Investors

I would not add any of these three stocks to my portfolio based on their dividend yields.

But that does not mean they should be ignored.

In fact, they could serve as useful indicators of the American consumer.

If Delta’s lower-priced premium fares gain popularity, Starbucks continues attracting customers despite higher prices and Disney’s premium experiences keep growing, it could suggest that affluent consumers remain a powerful source of corporate revenue.

On the other hand, if customers increasingly trade down, cut discretionary spending or abandon premium experiences, it could signal that the lower arm of the K-shaped economy is beginning to pull the broader consumer market lower.

For now, I am watching the story rather than buying the stocks.

Because sometimes, the companies investors should watch most closely are not necessarily the ones they should buy.