The Dow Jones Industrial Average is a price weighted index of 30 blue chip stocks that span across an array of sectors and industries in the United States. It is one of the three main stock market indices. The other two are S&P 500 and Nasdaq 100.
Simply referred to as the “Dow”, it is the second oldest index in the world; the first being Dow Jones Transportation Index.
When initially formed in 1896, the Dow Jones consisted of just 12 stocks that were “industrial” in nature and ranged from sectors like oil and gas, railroads, tobacco, cotton, sugar, iron and coal.
This index has now grown to 30 companies spanning a much broader perspective of the American economy including technology, consumer discretionary and health care.
When the Dow Jones is rising in price, it is associated with a strong American economy. Conversely, when the Dow Jones is dropping in price, it is associated with a weak American economy that could be in recession.
Attached is an entertaining video that explains what the Dow Jones is. A job well done, even a kindergarten student will have no difficulty in learning about the Dow.
This article is divided in to sections. Feel free to jump to the topic that interests you.
- What Stocks Make up the Dow Jones Industrial Average?
- Dow Jones Industrial Chart
- Historical Returns of the Dow Jones
- Total Market Capitalization of 30 Dow Jones Stocks
- Highest Yielding Dividend Stocks in Dow Industrials
- What Sectors Make up the Dow Jones?
What Stocks are in the Dow Jones Industrial Average?
Readers can download a Microsoft Excel spreadsheet of all 30 Dow Jones stocks with relevant data such as:
- Founding year
- Industry or sector
- Market capitalization
- 2018 revenues (in $ billions),
- Current dividend yield
- Dividend payout
- Price to earnings ratio
The file can be filtered and sorted in various ways to find undervalued stocks that have high dividend yields, or stocks with the lowest price to earnings ratio, or stocks with the largest market capitalization.
Here are the steps to work with the file.
Step#1: Highlight all the cells from Rows 1 to 31.
Step #2: On the Quick Access toolbar, select the “Data” tab and hit on “Sort.”
Step #3: In the Sort dialogue box, you can select Sort by: Dividend Yield, Sort on: Values and Order: Largest to Smallest.
Step #4: Click OK button once all these parameters are selected.
We have also embedded the full list of 30 Stocks in the Dow Jones Industrial Average in a table. Feel free to scroll to the right to see the full data offered.
- Apple (AAPL)
- American Express (AXP)
- Boeing (BA)
- Caterpillar (CAT)
- Cisco (CSCO)
- Chevron (CVX)
- Exxon Mobil (XOM)
- Walt Disney (DIS)
- Dow, Inc. (DOW)
- Goldman Sachs (GS)
- Home Depot (HD)
- IBM (IBM)
- Intel (INTC)
- Johnson & Johnson (JNJ)
- JP Morgan Chase (JPM)
- Coca Cola (KO)
- McDonalds (MCD)
- 3M (MMM)
- Merck & Company (MRK)
- Microsoft (MSFT)
- Nike (NKE)
- Pfizer (PFE)
- Procter & Gamble (PG)
- Travelers Company (TRV)
- UnitedHealth Group (UNH)
- United Technologies (UTX)
- Visa (V)
- Verizon (VZ)
- Walgreens Boots Alliance (WBA)
- Walmart (WMT)
Chart of the Dow Jones Industrial Average
A monthly chart of the Dow Jones is shown below. Price starts from January 1945 when the index traded at 192.90. Price as of October 2019 is 26,787.40.
Historical Returns of the Dow Jones Average
According to data from DQYDJ, the Dow Jones has gained a compounded annual growth rate (CAGR) of 10% including dividends over the last 50 years.
Notice from the table below that the 10% return also is true for over 30, 20 and 10 years.
Market Capitalization of Dow Jones Industrials
For year end 2019, the 30 Stocks in the Dow Jones Industrials add up to a total market capitalization of $8.32 trillion. During the 2008 recession, those 30 stocks were valued at a total of just $3.5 trillion. This data is derived from a research study done by Siblis Research.
This shows how far the Dow Jones has come since the 2008 great financial crisis. Apple and Microsoft are the only 2 Dow Jones Stocks with valuations in excess of $1 trillion.
What’s more interesting is the top 10 stocks in the Dow Jones make up $4.7 trillion in market capitalization.
|Symbol||Component Name||Market Capitalization (Billions of $)|
|AAPL||Apple Inc.||$ 1,079.63|
|MSFT||Microsoft Corporation||$ 1,062.09|
|V||Visa Inc.||$ 379.98|
|JPM||JPMorgan Chase & Co.||$ 377.52|
|JNJ||Johnson & Johnson||$ 348.35|
|WMT||Walmart Inc.||$ 340.20|
|PG||The Procter & Gamble Company||$ 305.17|
|XOM||Exxon Mobil Corporation||$ 294.61|
|HD||The Home Depot, Inc.||$ 256.95|
|VZ||Verizon Communications Inc.||$ 247.99|
Interesting Facts About the Dow Jones Components
Lets have some fun and report interesting facts about stocks in the Dow Jones Average using this Excel spreadsheet.
Fact #1: Top 10 Dow Stocks with highest revenues as of 2018 make up $2 trillion in annual revenues.
|Component Name||2018 Revenue (Billions $)|
|Walmart Inc.||$ 514.41|
|Exxon Mobil Corporation||$ 290.21|
|Apple Inc.||$ 265.59|
|UnitedHealth Group Incorporated||$ 224.87|
|Chevron Corporation||$ 158.90|
|Walgreens Boots Alliance, Inc.||$ 131.54|
|Verizon Communications Inc.||$ 130.86|
|Microsoft Corporation||$ 110.36|
|JPMorgan Chase & Co.||$ 109.03|
|The Home Depot, Inc.||$ 108.20|
Fact #2: Top 10 highest dividend yielding Dow Stocks are:
|Component Name||Dividend Yield|
|Exxon Mobil Corporation||5.04%|
|International Business Machines||4.54%|
|Verizon Communications Inc.||4.10%|
|Walgreens Boots Alliance, Inc.||3.39%|
|JPMorgan Chase & Co.||3.10%|
Fact #3: For readers searching for companies that can grow their dividends over time, consider Dow Jones stocks with the lowest dividend payout ratios. They are:
|Component Name||Dividend Payout Ratio|
|Goldman Sachs Group||13.50%|
|American Express Company||18.80%|
|The Walt Disney Company||22.10%|
|UnitedHealth Group Incorporated||27.90%|
|JPMorgan Chase & Co.||30.00%|
|The Travelers Companies, Inc.||30.50%|
Dow Jones Stocks Represent Which Sectors?
20.2% of stocks in the Dow Jones are in Industrials sector while 20% are in Information technology.
Financials come in 3rd at 14.7% while Consumer Discretionary comes in 4th place, and health care in 5th.
Betting on the Dow Jones means investors are bullish on the trajectory of the US economy. Therefore, sectors like Industrials, Technology, Financials and Consumer Discretionary are expected to outperform.
When recession hits, sectors like health care, consumer staples and utilities will out perform. Please note that there are no Utilities stocks in the Dow Jones Industrial Average.
Who Owns the Dow Jones Industrial Average?
It is maintained by S&P Dow Jones Indices, a partnership between S&P Global, CME Group and News Corp.
How is the Dow Jones Industrial Average Calculated?
The Dow Jones Industrial Average is a price weighted index versus a market capitalization weighted index such as the S&P 500. As such, the prices of the 30 components are added together and then divided by the Dow divisor.
Dow Divisor is constantly changing to account for stock splits and other market factors that modify the prices of stocks.
Here is a real life example.
Consider the Dividend Scholar Index comprised of 20 stocks that total $2,000 when all share prices are added. Current Dow Divisor is 10 for this example.
Dividend Scholar index is calculated as $2000 / 10 (divisor) = 200 points.
Now lets account for a 2 for 1 stock split. One of the stocks in the index did a 2 for 1 stock split reducing its share price from $100 to $50. What is the updated total price of all the stocks? It is $2000 – $50 (for the reduction in price of the stock split) = $1950.
The index would now be calculated as $1950 / 10 divisor = 195. However, this would not be an accurate calculation because the value of the company did not change, just a stock split that creates 2 shares for each 1 share.
In order to fix this, we have to adjust the Dow Divisor and reduce it from 10 to 9.75. This way, the Index would still be calculated as $1950 / 9.75 divisor = 200 points.
The current value of the Dow Divisor is set to 0.1474. 1 divided by 0.1474 means the value of the Dow Jones Industrial Average is 6.78 times bigger than the sum of the components’ stock prices.
Fun Facts About the Dow Jones Industrial Average
There are 14 companies in the Dow Jones Industrial Average that are over 100 years old. They are:
- Procter & Gamble Company was founded in 1837 (182 years old)
- Pfizer founded in 1849 (170 years).
- American Express in 1850 (169 years).
- Travelers Companies in 1853 (166 years).
- Goldman Sachs in 1869 (150 years old).
- Chevron in 1879 (140 years old).
- Johnson & Johnson in 1886 (133 years old).
- Merck in 1891 (128 years old).
- Coca Cola in 1892 (127 years old).
- Dow Inc. in 1897 (122 years old).
Changes to the Dow Jones Industrial Average
Stocks listed in the Dow Jones Index have changed 54 times since inception in 1896. Below are the most recent changes:
- June 26th, 2018 – General Electric is replaced with Walgreens Boots Alliance.
- September 1st, 2017 – DuPont merged with Dow Inc. forming a new company called DowDuPont.
- March 9th, 2015 – AT&T is replaced with Apple.
- September 23rd, 2013 – Alcoa, Bank of America and Hewlett-Packard are replaced with Goldman Sachs, Nike and Visa.
- September 24th, 2012 – Kraft Foods is replaced with UnitedHealth.
- June 8th, 2009 – Citigroup and General Motors are replaced with Cisco Systems and Travelers.
- September 22nd, 2008 – AIG is replaced with Kraft Foods.
- February 19th, 2008 – Altria and Honeywell are replaced with Bank of America and Chevron.
- April 8th, 2004 – AT&T, Eastman Kodak and International Paper are replaced with AIG, Pfizer and Verizon.
- November 1st, 1999 – Chevron, Goodyear Tire, Sears Roebuck and Union Carbide are replaced with Home Depot, Intel, Microsoft and SBC Communications.
- March 17th, 1997 – Bethlehem Steel, Texaco, Westinghouse and Venator are replaced with Hewlett-Packard, Johnson & Johnson, Travelers Group and Walmart.
- May 6th, 1991 – American Can, Navistar and USX are replaced with Caterpillar, JP Morgan and Disney.