7 Time-Tested Dow Stocks to Buy in 2025
The Dow Jones Industrial Average is home to many industry-leading blue chip stocks, with a significant number of them paying dividends. While the Dow tends to lag behind the S&P 500 during growth-driven rallies, established companies with a track record of earnings growth offer a compelling investment opportunity.
Underperformers in 2024, but Poised for Success in 2025
Only 10 of the 30 Dow components have outperformed the S&P 500 this year, with two of those components being new additions to the Dow. Even well-known growth stocks like Microsoft have struggled to keep pace with the S&P 500 in 2024. However, this presents an opportunity to invest in high-quality companies at reasonable valuations.
Investing in Volatile Markets
Investing during periods of volatility can be a great way to build wealth over time. As Ken Fisher of Fisher Investments once said, “You don’t need perfect timing to achieve marvelous returns. Time in the market beats timing the market — almost always.” When the market is expensive, it’s essential to invest in companies that can justify their valuations and have the resilience to endure challenges.
7 Excellent Dow Stocks to Buy in 2025
Chevron: A Low-Cost Oil and Gas Major
Chevron boasts an excellent balance sheet and a low cost of production, enabling it to generate positive cash flows even at mediocre oil and gas prices. Its sizable refining business and growing low-carbon business make it an attractive investment opportunity.
Coca-Cola and Procter & Gamble: Dividend Kings
These two Dividend Kings have paid and raised their dividends for at least 50 consecutive years. They may not be the fastest-growing companies, but they can perform exceptionally well during economic downturns or recessions, making them excellent buys for risk-averse investors.
McDonald’s: A Franchise Model with Passive Income Potential
Having just raised its dividend for the 48th consecutive year, McDonald’s is on track to become a Dividend King by 2026. Its franchise model reduces costs and volatility, making it an attractive investment opportunity for those seeking passive income.
Visa: A High-Growth Business Model
Visa achieves ultra-high operating margins and benefits from network effects. The company has been able to sustain its growth by expanding internationally and boosting services for its debit and credit card users. Despite its low yield, Visa remains a reasonable value and is worth a closer look in 2025.
Microsoft: A Balanced Big Tech Giant
Microsoft stands out as one of the more balanced big tech giants, generating record sales and 10-year high operating margins. Its spotless balance sheet and ability to repurchase stock and raise its dividend at impressive rates make it an attractive investment opportunity.
Nike: An Underrated Dividend Stock
Nike stock has been one of the worst performers in the Dow this year, but its forward P/E ratio doesn’t even look that compelling. The business is slowing down and desperately needs a turnaround. However, its 23 consecutive years of annual dividend increases make it an underrated dividend stock worth considering.
Investment Opportunities Abound
These seven Dow stocks offer a balance of reasonable risk and potential reward, making them excellent long-term buys in 2025. Income-oriented investors may gravitate towards Procter & Gamble, Coca-Cola, McDonald’s, and Chevron, while those seeking growth may want to explore Visa and Microsoft. Nike, despite its challenges, presents an opportunity for those confident in its ability to turn things around.
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