After the inventory is taken out, the initial move is quite mechanical: all index funds and ETFs that follow the benchmark are required to sell. This results in a short-lived artificial selling pressure, which isn’t really related to the inherent business fundamentals.
For those investors looking to tune out the surrounding noise, it could be a moment worth monitoring closely.
Remember the Nvidia signal from 2009? A similar unusual signal is appearing again. Back in 2009, a “double down” signal emerged for a lesser-known chipmaker called Nvidia. Now, a company that is significantly smaller than Nvidia is showing a similar “full conviction” sign.
On June 22, S&P Dow Jones Indices removed two companies, Campbell’s (NASDAQ:CPB) and Pool Corporation (NASDAQ:POOL), replacing them with names from the semiconductor and electronics sectors. This shift indicates the growing inclination of the S&P 500 towards technology. However, both Campbell’s and Pool Corp. are now part of the S&P Small Cap 600, meaning they haven’t vanished from the market entirely; they’re simply less prominent.
1. Campbell’s: A High-Yield Story
Campbell’s current dividend yield is over 7%. The stock has faced challenges for more than a year, weighed down by stock price declines, ongoing costs from its acquisition of Sovos Brands in 2024, and operational issues following an ERP system transformation. As the stock prices dropped, yields inevitably rose.
This dividend has been consistently paid for 51 years now. The payout ratio stands at about 76% of profits—not exactly lean, but it is sufficiently covered. Plus, the cash flow looks even better. Fifty-one years of dividends really means something when both earnings and cash flow back them up.
On the other hand, Campbell’s Rao brand is branching out beyond just numbers. The company’s trailing net sales surpassed $1 billion, and in May 2026, Campbell’s took a significant step by acquiring a 49% stake in La Regina, an Italian maker of Rao’s sauces. It’s vital for keeping that artisanal touch in Scaffati, Italy. That’s what makes Rao’s sauces a premium product, which can be tricky to build.
But, here’s a straightforward caution: Campbell’s dividend growth has been rather slow. Over five years, dividends have only increased by about 1.26%. This aspect is crucial for investors seeking income that at least keeps up with inflation. Right now, Campbell’s is more of a high-yield, low-growth dividend scenario—not really a compounding interest story. Whether that’s suitable for you will depend on your investment approach.
2. Pool Corp.: The Dividend Growth Champion
Pool Corp’s yield may seem modest compared to Campbell’s—around 2.4% right now—but the real story lies in its trajectory.
Pool has consistently raised its dividend for 22 consecutive years, with average annual growth of about 17% over the past decade. That’s really the point of the formula outlined in their user manual.
If a company keeps boosting its earnings, it usually can raise its dividend too. Each price increase based on growth means that earlier investors are seeing a much higher yield from their initial investment. That’s the essence of dividend growth investing, and Pool has effectively managed this across the market.
The business focuses on selling pool supplies and equipment to various buyers, and around 60% of its revenue comes from ongoing maintenance and repairs. So, whether housing markets are booming or stagnant, people are still going to need to keep their pools in shape. In the first quarter of 2026, net sales rose by 6% and operating income increased by 7%. The resurgence in discretionary spending on pools, which had slowed after the pandemic surge, is now on the upswing.
On the digital side, things are looking promising too. Pool’s proprietary platform, Pool360, now makes up 13% of net sales and is on the rise. This has been an operational improvement the company has built over time.
However, some risks exist: Pool Corp. has a different connection to housing market dynamics compared to Campbell’s. Discretionary sales could falter if interest rates stay high and homeowners continue delaying costly outdoor projects.
Conclusion
Both stocks were removed from the S&P 500 due to mechanical index rebalancing rather than any significant performance issues. Campbell’s presents an attractive opportunity with a rare yield for a consumer staples brand and a solid long-term growth potential in the Rao’s brand. In contrast, Pool Corp. offers a compelling narrative of dividend growth along with a long history of consistent pay increases backed by a resilient business model. While neither is guaranteed, both should be contemplated beyond just the implications of their index removal.
Is it a good time to buy Campbell’s stock?
Before making a decision to invest in Campbell’s stock, consider the key points:
Our analyst team has pinpointed what they believe are ten top stocks for purchase…and Campbell’s isn’t one of them. The potential of these ten stocks to offer impressive returns in the coming years is noteworthy.
In fact, consider this: if you had invested $1,000 in Netflix back in December 2004 based on their recommendations, you’d have about $418,761 now! Or with Nvidia, a $1,000 investment in April 2005 would have grown to around $1,195,804!
It’s important to highlight that the stock advisor’s total average return stands at 918%—a significant outperformance compared to the S&P 500’s 208%. Don’t overlook the latest top 10 list. Join an investment community designed for everyday investors.
*The stock advisor will return on July 4, 2026.
Micah Zimmerman has no positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Pool Corp. and Campbell’s.
Two high dividend stocks have been removed from the S&P 500. Which one should you buy now? Originally published by The Motley Fool
