You can't beat Dow Jones stocks for stability and defense in a down market. By the same token, the blue chip average won't always keep up in a rising market.
Case in point: the S&P 500 gained 24% on a price basis last year, while the tech-heavy Nasdaq Composite, which is both riskier and "growthier," rose 43%. The Dow Jones Industrial Average, by comparison, very much lagged the pack. The elite bastion of 30 mostly mature industry leaders delivered a comparatively poky gain of 14%
To be sure, that's a very good year on an absolute basis: the Dow's annualized total return over the past three decades comes to a bit more than 10% before inflation. And yet the fact remains that the Dow lagged the S&P 500 and Nasdaq by painfully wide margins this year.
Zoom out, however, and Dow Jones stocks have served buy-and-hold investors quite well since the market hit its previous all-time closing high back on January 3, 2022. On a total return basis (price change plus dividends), the Nasdaq is up 2.9% and the S&P 500 is up 9.9%.
The Dow, however, generated a total return of 12% over the same span.
It's also important to know that the Dow's recent underperformance isn't abnormal. More than half of the average's components are low-beta stocks. That means they tend to lag in up markets, but hold up better when everything is selling off. This low-beta skew can actually be quite advantageous to long-term investors.
After all, as bright a year as it's been for equity investors, downside risks very much remain. Economists still put the odds of recession hitting in the next year at 40%. Meanwhile, the New York Federal Reserve's yield-curve model calculates recession odds at greater than 60%.
Should such a change in market fortunes come to pass... Well, that's where Dow Jones stocks come in.
Dow Jones stocks ranked
This collection of industry-leading companies and dividend growth stalwarts with their impregnable balance sheets can offer relative stability in tempestuous market times. From the best Dow dividend stocks to the most widely held blue chip stocks, components of the industrial average occupy top spots in the portfolios of hedge funds and billionaire investors. Warren Buffett's Berkshire Hathaway (BRK.B), in particular, is a huge fan of select Dow stocks.
To get a sense of which Dow Jones stocks Wall Street recommends at an increasingly uncertain time for equities, we screened the DJIA by analysts' consensus recommendations, from worst to first, using data from S&P Global Market Intelligence.
Here's how the ratings system works: S&P surveys analysts' stock calls and scores them on a five-point scale, where 1.0 equals a Strong Buy and 5.0 is a Strong Sell. Scores between 3.5 and 2.5 translate into Hold recommendations. Scores higher than 3.5 equate to Sell ratings, while scores equal to or below 2.5 mean that analysts, on average, rate shares at Buy. The closer a score gets to 1.0, the higher conviction the Buy recommendation.
Note that Amazon.com (AMZN) was added to the Dow as of February 26, replacing Walgreens Boots Alliance (WBA).
See the table below for analysts' consensus recommendations on all 30 Dow Jones stocks, per S&P Global Market Intelligence, as of February 25, 2024.
