Why You Should Invest in the Dow Jones? | Investment Series

What is the the Dow?

The Dow Jones Industrial Average (DJIA or "the Dow") is a stock market index that shows the value of 30 large, publicly traded companies, most listed on the New York Stock Exchange.

The highest closing price for each stock is used to calculate the daily index; price decreases result in negative numbers.

The Dow Jones Industrial Average (DJIA) is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange, American Stock Exchange, and NASDAQ stock exchanges each day.

The aggregate value of a company’s stock in the index is based on its simple market capitalization – the number of shares multiplied by share price.

The DJIA and S&P 500 are considered benchmarks for the U.S. equity markets as a whole, which have historically exhibited high correlation with one another over time.

Although it is not an investment vehicle, most actively managed mutual funds track these indices because they serve as primary performance benchmarks for those funds’ clients and are offered passively through many fund companies.

Why You Should Invest in the Dow Jones

The DOW is a great investment for beginners because it gives you the chance to invest in large companies that pay dividends.

Industrial companies have a history of paying small but regular dividends, which is hard to find in many other types of investments.

For example, in 2017, the DOW paid out $3.5 billion in dividends as opposed to buying property or other long-term projects.

Moreover, its average dividend yield was 2.8% in 2017, meaning if you invest $100 000 today and receive a $2 000 dividend payment annually for the next 10 years (which is realistic), you could expect to earn $38 000 in total over those 10 years – that's 28 times your initial investment!

Historical data of the Dow Jones has shown to be a good investment over the years.

In fact, using historical price data to predict future returns is one of the most popular methods used in finance.

The stock market tends to have a long-term upward trend, helping investors get consistent returns over time.

Its history dates back to 1896 when it was first published.

With nearly 120 years of stock data, this index shows strong historical returns and consistently positive risk-adjusted returns, indicating that the pick and choose method is definitely a viable option for long term investors.

Over its long history, the Dow Jones has averaged annual returns of 10.11%.

In addition, we can see that the crashes in 1929 and 2008 were short lived.

The market recovered within a few years afterwards and investors were able to build their wealth again.

Here is the list of the 30 Dow Jones stocks as of 12 Sept 2022.

Symbol	Company Name	Share Price
AXP	American Express Co	161.03
AMGN	Amgen Inc	238.86
AAPL	Apple Inc	160.66
BA	Boeing Co	158.89
CAT	Caterpillar Inc	190.76
CSCO	Cisco Systems Inc	46.28
CVX	Chevron Corp	161.41
GS	Goldman Sachs Group Inc	341.24
HD	Home Depot Inc	302.13
HON	Honeywell International Inc	192.53
IBM	International Business Machines Corp	130.38
INTC	Intel Corp	31.58
JNJ	Johnson & Johnson	165.84
KO	Coca-Cola Co	62.58
JPM	JPMorgan Chase & Co	120.56
MCD	McDonald’s Corp	260.62
MMM	3M Co	125.69
MRK	Merck & Co Inc	88.09
MSFT	Microsoft Corp	265.81
NKE	Nike Inc	112.27
PG	Procter & Gamble Co	140.95
TRV	Travelers Companies Inc	164.35
UNH	UnitedHealth Group Inc	523.33
CRM	Salesforce Inc	163.68
VZ	Verizon Communications Inc	42.69
V	Visa Inc	206.68
WBA	Walgreens Boots Alliance Inc	36.8
WMT	Walmart Inc	137.51
DIS	Walt Disney Co	116.9
DOW	Dow Inc	51.12

Reference:
https://www.cnbc.com/dow-30/