Top Nav

DOW Stocks

If you want to consider stocks with a long track record, consider the Dow Jones Industrial Average (DJIA). It was initiated in May 26, 1896. Now that’s a long track record. Made up of only 30 stocks, it is the most quoted, most publicized market index in the world. As Dow stocks go, so goes the market.

dow-stocksDow stocks are not just industrials

The index is calculated every two seconds during market hours, but regardless of the word “Industrials” in the name, many stocks included in the DJIA are far from manufacturers. Marquee companies include Visa, IBM, Goldman Sachs and Chevron.

In fact, financial service firms comprise nearly one-quarter of the companies in the Dow. Industrials rank second, with a 19% presence in the index. Other sectors represented in the Dow Industrials include consumer services (13%), technology (11%), health care (10%), oil and gas (9%), consumer goods (8%), telecommunications (3%) and basic materials (3%).

The DJIA excludes utilities and transportation stocks because there are Dow indices for those sectors, as well.

Dow stocks represent the finest companies in America. Many have been in business for decades and most pay income to investors in the form of stock dividends. These “bellwether” stocks are also referred to as “blue chip stocks.”

Why Google can’t be a Dow stock

The Dow Industrials is a price-weighted average. In other words, the one-share value of each of the stocks in the index, combined, is divided by 30. For example, if you had four stocks in an index with values of 10, 20, 50 and 100, you would divide by 4. The index average would be 45 (180 divided by 4).

However, if you took the current share price of each of the Dow stocks, added them up and then divided by 30, you wouldn’t get the current Dow Industrials index price. Why? Some of the Dow stocks have split over the years, and the index has been adjusted for the change in share price.

(A stock split increases the number of available shares of stock, but the price is lowered so that the total value of all issued stock is the same. For example, a $50 stock with 100 shares issued splits to $25, and now has 200 shares available. It still has $5000 worth of stock issued, also known as the company’s market capitalization.)

The Dow Industrials price-weighted average allows higher priced stocks to have more impact on the index overall. That’s one reason high-priced stocks like Google can’t be a part of the Dow. Its price-weighted presence would account for almost one-third of the DJIA index value.

This $10 Billion IPO Will Break Wall Street’s Rules

The $10 billion Spotify IPO may be structured as a unique sale: a direct offering on exchanges. Learn about a 100% legal loophole that allows you to invest in Spotify pre-IPO shares.

IPO Deals Surge 1,314% . . . Here’s What’s Next

The surge of IPO deals in the first quarter illustrates the strong appetite for IPOs in the rest of the year. Learn how to access IPO shares before they hit the market.

Buy IPO Stocks . . . Before They Start Trading

The IPO market is really starting to heat up. We've seen three big IPOs in six weeks and the stock performance has been impressive. Now's the time to get up to speed.

Qualcomm’s 4% Dividend Yield Signals Another Buying Opportunity

Qualcomm has offered investors two buying opportunities in as many months , , , a chance to lock in a high dividend yield on Qualcomm shares.

Bullish: Pot Stock ETF Starts Trading

It's a monumental development. The first cannabis stock ETF makes the entire sector more accessible to investors and will help increase demand and interest in pot stocks.

More Recent Dow Stock Articles

View All Dow Stock Articles

Income and Prosperity Offer

Income & Prosperity is designed to help you seek out the safest income opportunities and discover an entire world of dividend investments. This free newsletter has a laser-like focus on one issue and one issue only: how can investors near or in retirement generate more income. Each day, you'll receive our best investment idea - skewed towards safe income - but also including lesser known opportunities to grow your wealth while keeping it out of harm's way.
You've successfully subscribed, click the link in your email to confirm your subscription.
There was an error, and you have not been subscribed, please try again.