The Dow Jones Industrial Average was the first stock market index. Charles Dow created the index in 1896. The original index listed 12 companies and has since expanded to include 30 stocks.
The participants in the Dow have changed over time, and some stocks in the index are more promising than others. While some Dow stocks have underperformed the broader market, others hold their weight and deliver exceptional returns for shareholders.
Investors looking to get outside returns and get exposure to solid companies should consider these three picks.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) has generated exceptional returns for investors and is a top holding in many funds. Shares have gained more than 250% over the past five years and are up by 54% year-to-date. Microsoft’s dividend yield isn’t that impressive but a high dividend growth rate and stock appreciation make up for it.
Microsoft has a large presence in multiple business verticals. The company offers investors exposure to cloud computing, PCs, video games and other industries. All of those industries have helped Microsoft deliver double-digit revenue and earnings growth for investors.
In the first quarter of fiscal year 2024, Microsoft generated $56.5 billion in revenue. It marks a 13% year-over-year improvement. The tech giant also reported 27% year-over-year net income growth. Microsoft Cloud was a big revenue driver. The Intelligent Cloud business segment delivered a 19% year-over-year revenue gain.
Microsoft has consistently rewarded long-term investors and has weathered several economic downturns. It is an enticing pick among the 30 Dow stocks.
Visa (V)
Visa (NYSE:V) has gained 18% year-to-date and is up by 75% over the past five years. It is a reliable performer with profit margins that regularly exceed 50%.
Top-line and bottom-line growth are regularly in the double digits. Visa continued this trend in the fiscal fourth quarter. The company’s GAAP net income of $4.7 billion represents an 18.8% year-over-year increase. Revenue jumped by 10.6% year-over-year.
Just like Microsoft, Visa has a low dividend yield that is a little less than 1%. However, the company does a great job at growing its dividend and buying back shares. In 2023, Visa hiked its quarterly dividend from $0.45 per share to $0.52 per share. This $0.07 increase represents 15.6% year-over-year growth.
Visa has the financials to support a double-digit year-over-year dividend growth rate for several years. That growth rate can lead to a more enticing yield for investors who accumulate shares in the financial conglomerate.
Walmart (WMT)
While other retailers have seen their stock prices fall, Walmart (NYSE:WMT) continues to chug along. Shares have gained 15% year-to-date and are up by 70% over the past five years. The company’s dividend yield is 1.35%. That is still low but higher than the other two companies on this list.
Walmart achieved 5.7% year-over-year revenue growth in the second quarter of fiscal year 2024. The company’s earnings per share jumped by 55.3% year-over-year from $1.88 to $2.92.
Many consumers turn to Walmart to save money on necessities and discretionary purchases. The retail corporation has built its brand on the promise of offering lower prices than the competition. As inflation picks up and people get more protective over how they spend their money, more consumers will turn to companies like Walmart.
Walmart gives investors a better chance of navigating market downturns and minimizing losses. When the economy is in full swing, Walmart can still deliver respectable returns for investors.
On the date of publication, Marc Guberti did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.
