Charles Dow, founder of Dow Jones & Company as well as the Wall Street Journal, also developed the concept for the Dow Jones Industrial Average as well as the other averages in his name.
Back then, there weren’t as many stocks to choose from and trading was pretty fast and loose, so having a list of the strongest stocks in the market was very useful. Those who followed in Dow’s footsteps also used his principles to develop the investing concept now called Dow Theory.
The 30 industrial stocks that make up the Dow have changed significantly since the early days. Back then they were railroad, shipping, shipping, sugar and coal companies. The engines of that bygone era’s economy.
Today they’re consumer electronics companies, shoe companies, insurance firms and consumer staples companies. Regardless of how we arrived here, this mixed bag represents a cross section of the modern American economy.
Here are the 7 best stocks to buy in the Dow Jones today:
- Apple (NASDAQ:AAPL)
- Microsoft (NASDAQ:MSFT)
- Nike (NYSE:NKE)
- Walmart (NYSE:WMT)
- Johnson & Johnson (NYSE:JNJ)
- Procter & Gamble (NYSE:PG)
- Goldman Sachs (NYSE:GS)
Like the other averages, the Dow Jones is sitting near new highs, but not all the stocks are participating. Let’s check out some of the biggest winners.
Best Stocks In The Dow Jones: Apple (AAPL)
You would have to have been living under a rock the past 20 years tonot know this company. But the amazing thing is, AAPL isn’t exactly the kind of company that would have likely made the original lineup of Dow Jones Industrials.
Those companies weren’t consumer stocks. Yet now, as the list has expanded, nearly half the 30 stocks in the index are consumer stocks or have a significant consumer component. That goes to show how the U.S. economy has changed as well.
But if you’re going to have consumer stocks, as my list of the top Dow Jones Industrials shows, you might as well pick the best. And AAPL is one of them. Its global reach and brand awareness are unmatched.
When a stock with a $2.2 trillion market cap is up 63% in a year like 2020, it shows you the kind of power it has in both good and bad markets.
Again, this is hardly a stock that would have fit the narrow focus of the original Dow Jones, but it’s self-evident how powerful this company is around the globe today.
You could argue that the digital era democratized the means of production, where the tools of creation were now in the hands of the workers, not just the factory owners. Its Windows platform, and now its hardware and cloud computing, are the de facto workshop for the majority global tech sector.
The stock is up 28% in the past 12 months, trades at a P/E ratio of 34 and delivers a 1% dividend. MSFT is well-positioned across all divisions and continues to expand its presence both home and abroad.
Launched by a modern running pioneer at the University of Oregon with nothing more than a humble waffle iron, NKE is now one of the leading athletic shoe, sportswear and equipment companies in the world.
While it was a pioneer in the field, it has always been NKE’s ability to find a way to make the trend fashionable. Running was just a niche sport until it became a craze. The same for tennis, basketball and golf.
What’s more, NKE also found a way to enter markets with style and turn sportswear into fashion as well. While there are plenty of competitors, only one or two rise to its global presence.
The stock is up 37% in the past year and as people get out and about more in 2021, sales should grow significantly.
What better stock consumer stock to buy from the Dow Jones than the world’s largest retailer?
There have been times during the past few decades when WMT came under challenges from competitors, expansion strategies or technology. And each and every time it was under threat if found a way to prevail. For a large company, that can be very challenging.
But the fact that it has done so on a variety of occasions over time shows that it regardless of its size, it continues to adapt to its customers’ needs and its competitors’ challenges.
The stock is up 27% in the past year and also has a rock-solid 1.5% dividend. It’s also a value play, with a P/E ratio of just 21 (the S&P 500 average is around 38).
Johnson & Johnson (JNJ)
Have you ever heard anannouncement on PBS that the Robert Woods Johnson Foundation contributed to making a show? He was the founder of JNJ with his brothers back in 1885.
Today, JNJ has hundreds of subsidiaries and operates in more than 60 countries, selling over the counter products like Tylenol, Motrin, Aveeno, Splenda, Rogaine and Visine, as well as medical devices and pharmaceuticals.
As a matter of fact, JNJ’s COVID-19 vaccine candidate is making great progress through trials and is a one-shot vaccine that can be kept at normal refrigerated levels. This could make it a very important option for more rural areas around the world.
The stock is up 8% in the past 12 months, and it has a reliable 2.5% dividend besides. Plus Johnson & Johnson has raised its dividend every year for the last 57 years. JNJ is a great play for investors looking for solid, steady long-term growth.
Procter & Gamble (PG)
To build a company that can stay in business for 184 years, you have to do a lot of things right. You have to have smart management that has continuity and clear idea of what the company is. You have to have quality products. You have to have a great distribution network that’s reliable and efficient, regardless of circumstances.
And most important, you have to know your customers.
PG has managed to accomplish all these things. A few years back it realized that its product collection was too large and becoming unwieldy. There was concern that PG couldn’t make the cuts necessary to keep it competitive with its long-time rivals as well as sharp newcomers. Turning a ship this large isn’t quick or easy.
But PG did it. What’s more it did it while remaining a dividend aristocrat — it has grown its dividend every year for the past 57 years. It’s not a sexy company, but it is a foundational company for any portfolio.
The stock is up 8% in the past 12 months and has a generous 2.3% dividend, which certainly beat most money markets or CDs.
Goldman Sachs (GS)
Even as a key financial institution, GS wouldn’t have made the original list of Dow Jones companies.
But it’s on there today. It’s one of the leading investment banks in the world. And in the U.S. it is generally the company where both Democratic and Republican presidents look for economic staff. That puts GS in a very unique position with its competitors.
It also helps with its business activities outside the U.S. This company works with a number of governments around the world to build markets and create financing for nations’ growth.
Also, because of its strategic position in global markets, GS is well hedged, so it can successfully navigate both bull and bear markets. Its new ventures are digital banking and cryptocurrencies.
The stock is up 23% in the past year and has a 1.6% dividend. It’s a top long-term financial stock.
Disclosure: On the date of publication, Louis Navellier has positions in MSFT and NKE in this article. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.
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