The Dow Jones is one of the oldest benchmarks in investing. Introduced in 1896, the index remains a popular benchmark for measuring the economy. There’s certainly more to measuring the economy than a single benchmark, but investors have used it as a gauge for many years.
The index has undergone many changes since its introduction in 1896. It originally consisted of 12 companies and was expanded to 30 companies in 1928. Some of the 1928 Dow Jones companies are still in business, while others are corporate giants of the past.
A closer look at the current Dow Jones holdings can reveal several opportunities to increase your return. That makes sense. The index has gained roughly 50% over the past five years, and it can’t achieve those gains with a bad portfolio. However, some Dow stocks are better than others. These are some of the best Dow stocks to consider.
American Express (AXP)
People continue to buy goods and services regardless of the economy. Many people turn to credit and debit cards to make those purchases, much to the benefit of American Express (NYSE:AXP). The credit and debit card firm has delivered a 23% year-to-date gain and has surged by more than 85% over the past five years. The stock has a 17 P/E ratio and offers a 1.21% yield.
The firm has a good history of dividend hikes. It has maintained a double-digit dividend growth rate for several years, including a 17% dividend hike this year.
The company continues to deliver strong financial results, including 9% year-over-year revenue growth in the second quarter. Net income jumped 39% year over year (YOY) in the same quarter, resulting in a 20% net profit margin. American Express has a more reasonable valuation than credit and debit card competitors. Wall Street believes the stock can gain an additional 8% from current levels.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) is a leading big tech stock that significantly influences the S&P 500 and the Nasdaq Composite. The company is also deeply integrated into many people’s lives. Many people use Amazon’s online marketplace to buy products and services. They can also turn to Whole Foods to buy groceries. Amazon Web Services powers many businesses, and people frequently use Amazon Prime Video for entertainment.
The tech giant delivered 10% year-over-year revenue growth in the second quarter. The results were decent but not as good as expected. Amazon Web Services was a bright spot, delivering 19% year-over-year revenue growth. Amazon’s advertising segment delivered 20% year-over-year revenue growth.
Amazon looks like it will deal with some short-term headwinds. However, its leading presence in multiple verticals makes it a compelling long-term stock. Amazon is still rated as a Strong Buy and has a projected 34% upside from current levels.
Walmart (WMT)
Walmart (NYSE:WMT) has stood out this year with a 29% year-to-date gain. The global retailer and the world’s leading grocer continues to generate revenue and net income growth. Q1 FY25 revenue increased by 6.0% year, while adjusted EPS went up by 22.4%.
The company continues to gain market share in the e-commerce industry. Online sales were up 21%, and store-fulfilled picks and deliveries contributed to the elevated e-commerce sales.
That’s not the only catalyst driving the rise in Walmart shares. The retailer’s global advertising business grew 24%, including a 26% increase in Walmart Connect’s U.S. revenue. Rising ad revenue is a great development for Walmart since advertising comes with higher profit margins.
Elevated earnings can help Walmart return to being a dividend-growth stock. The company made strides in this area earlier this year by announcing a 9% dividend hike. That’s Walmart’s highest dividend increase in more than a decade, and it marks Walmart’s 51st consecutive year of dividend hikes.
On this date of publication, Marc Guberti held a long position in AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.