The Dow Jones rebounded by 4.4% in 2023, recovering from an 8.8% drop in the previous year. However, not all stocks have participated in this recovery, with Walgreens Boots Alliance, Nike, and 3M underperforming. Walgreens has been struggling beyond this year, with its shares trading at a quarter of their value in 2015. The company’s profitability has not improved significantly, and its operating loss has expanded. Nike is facing challenges due to increased costs, resulting in a decline in gross margin and reduced diluted EPS. 3M delivered disappointing results, with adjusted sales falling and slower growth expected next year.
Walgreens, Nike, and 3M continue to offer dividends to their investors, but concerns have been raised about their sustainability. Walgreens’ negative free cash flow raises questions about the sustainability of its 8.6% dividend yield. Nike, on the other hand, has consistently raised dividends for 21 consecutive years, while 3M offers a 6.2% dividend yield and has increased its payment annually for over 60 years. These underperforming stocks have prompted discussions about whether they present a buying opportunity or a signal to stay away. It is important to carefully evaluate the fundamentals of each company before making an investment decision, despite the positive performance of the broader market.