2025 Is Gonna Get Uncomfortable

Kelly Green | Maudlin Economics Dividend Digest
May 7, 2025

I hate to be the one to break it to you, but the economy and the markets are not working efficiently. It’s been that way for at least all of my adult life (2008), and maybe a handful of years before that.

Don’t get me wrong, I’m not endorsing any of the political actions being taken right now. Policy consequences unfold over time and most politicians are not thinking past stage one. What might seem like tonic to the market today can turn toxic as it trickles through the system.

My degree is in Economics, and I firmly believe that market intervention creates lies about supply and demand. However, most interventions are set in motion for our general comfort. Boom/bust and supply/demand cycles are not comfortable… but they always find equilibrium if left alone.

But we’ve rarely been able to take a hands-off approach, and our attempts at meddling are not working. I’m here for some sort of drastic change in the markets right now. And it looks like that’s exactly what we’re going to get.

I view COVID as a Great Accelerator. Eventually, we were going to reach the point where people could work from home and control their own work-life balance. Merit would be based more on the quality of your work and less on the time spent physically at a location.

We would also eventually get to the point where we didn’t have to interact with anyone at the grocery store. The pandemic opened my eyes to Scan and Go, and I’m never going back to the cashier lines.

The post-COVID new normal has turned out completely different than what I expected.  We see employers forcing workers back to the office, and companies like Target are reducing or eliminating self-checkout stations.

Things got “uncomfortable” so we’ve started to rewind the narrative. Except we won’t be able to, as there are a whole new set of catalysts headed down the pike. The post-tariff war new normal will unfold.

As everything starts rocking, we need to watch for certain things that can affect our income streams. And one of them ties back to a missing piece of information from my last note to you.

Researching With Blinders On

I heard from a few of you over the past week to point out that I neglected a crucial fact in last week’s missive: Omnicom Group (OMC) will acquire InterPublic Group (IPG). The deal should close in the second half of this year.

I was too hyper-focused on specific numbers and completely skimmed over the acquisition mentioned in both companies’ press releases. It’s a good reminder to take a step back and double-check your findings.

This deal is expected to generate annual cost synergies of $750 million as two American companies out of the Big 4 of marketing become one. The remaining two companies are British company WPP plc (WPP) and French company Publicis Groupe SA (PUBGY). They pay dividend yields of 6.4% and 3.5%, respectively.

IPG shareholders will receive 0.344 OMC shares for every share they own in this deal. OMC currently yields just 3.6%, even though shares have fallen 16% over the past year. That means IPG shareholders are sure to see their yield cut nearly in half. And although OMC once raised its dividend regularly, that hasn’t happened since 2021.

Once three IPG Board members join Omnicom and all synergies are in play, we could see a change in the dividend policy. I would expect to see hints on that by next summer. Still, buying OMC now would be a speculation on the growth of the new company rather than a steady income play.

Mergers and acquisitions will be a repetitive story this year and probably into 2026.

Consolidation Is on the Horizon

The Big 4 has been reduced to the Big 3 in the world of ad companies. We’ve seen the same thing happen with telecoms over the years. Sure, there are smaller companies within the industries, but overall, these are oligopoly markets—run by a few large firms who then dictate offerings and price.

Yield Shark readers aren’t new to M&A’s taking our yield away. In January 2023, I recommended TravelCenters of America senior secured notes. They had a yield of 8% and matured in 2029. It should have been a guaranteed 54% total return for us over a six-year holding period.

Instead, BP plc (BP) announced it would buy TravelCenters of America shortly after our purchase. Our notes were redeemed just 5 months later. That deal stung us when M&A was coming off the record highs of 2021.

Source: Bain & Company

You can see M&A goes through cycles. In 2021, we saw a disruption to the normal cadence of that cycle. COVID delivered a gut punch to many companies. Some simply ceased to exist and others were acquired.

After the 2021 spike, M&A slowed in 2023 and 2024 due to a valuation gap. This is the difference between what buyers wanted to spend and what sellers wanted to charge for their companies. This gap has blocked many recent deals.

There are still many companies that have yet to find their post-COVID new normal. They never reached a new equilibrium. Add President Trump’s new policies to the mix, and companies will have to pivot yet again. And I think that’s going to mean more M&A ahead. So, keep an eye out for where that could disrupt your dividends, especially for Current Yield stocks you rely on for income right now.

For more income, now and in the future,

Kelly Green

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