Four Dow Jones Companies to Add to Your Portfolio
Howard is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The Dow Jones Industrial Average is a collection of 30 of the “best” stocks throughout the market. These companies are usually well known for being large cap stock that consistently put up large revenues. Following the Dow 30 can provide good stability for your portfolio by investing in companies that have been proven to be able to withstand whatever the economy goes through. These four stocks are stable stocks that can stabilize your portfolio through diversification in the best companies of their industries and still give you growth potential.
Alcoa (NYSE: AA), founded in 1888, is the world leader in aluminum and the largest refiner of alumina and miner of bauxite. The stock is down around 70% of its value from its 2008 peak of $39. The industry of aluminum production has increased worldwide for the past two years and its worldwide demand is being estimated to grow to $160 billion in revenue in the next five years. Alcoa, representing 14.7% of market sales, is poised to cash in on the worldwide growth US revenue and worldwide revenue split right down the middle. Aluminum is also starting to be favored by automotive manufacturers, for its lightweight properties helps improve fuel efficiency. With its cheap price Alcoa is a good play for stock that has growth potential, but still has been able to post consistent revenue and pay out dividends.
One of Warren Buffett's favorite stocks, Coca-Cola (NYSE: KO), has been a beverage behemoth for the past 125 years. The Interbrand's most valuable brand of 2011 sells over 1.8 million products per day. Coke is arguably one of the most stable companies today; they have a total of fifteen different brands that bring in over a billion dollars of revenue. Coca-Cola still has room to grow with their innovation of new drinks and tweaking their current drinks, like Coke and Coke Zero. They have a plan to try and double revenue in the next decade; by investing $30 billion in developing markets like the Middle East and India. In these emerging markets KO only has a small total of the market, as opposed to America where they have 21%. With a consistent dividend yield of 2.8% Coca-Cola is a good buy for any income investors with a potential for strong growth over the long haul.
Altria (NYSE: MO) is the largest tobacco company in the US, controlling almost half of the cigarette market with their bestselling brand Marlboro. Other brands include Copenhagen, Skoal, and Black & Mild. Altria is most famous for its distinction of being the best performing stock of the S&P 500 for the past 44 years. This comes even while the average smoking rate in the US continues to decline. Altria also controls 55% of the smokeless tobacco market that since 2009 has grown in revenue by 21%. Maybe more important to investors is the pledge Altria has taken to pay out 80% of earnings to investors in the way if a 5.3% dividend yield. Even though a shrinking market and increased regulations make Altria’s future look bleak for a short-term to medium-term investment, Altria is a good buy. They still are one of the best public companies, and with a high dividend yield that should not be lowered anytime soon, investors will be rewarded.
General Electric (NYSE: GE) is the sixth largest firm in the US, the number five best global brand, and the number nineteen most innovative company among many other distinctions. GE, a multinational conglomerate, has been around since 1892 and is the only company still in business that was included on the original Dow Jones Industrial Average. With cities of at least one million residents expecting to be in the 500’s within the next decade the GE energy department have a huge growth potential in helping these new cities set up energy grids. In the past two years revenue from the US has decreased from 65% to 47%. This move towards growing international markets is giving GE a potential increase of revenue for the next decade. GE is in a recovery from the 2008 credit crisis that drug down their financial department which means right now the stock is at a cheap price at just a P/E of 17. With the potential growth of developing countries buying GE will give investors part of a company synonymous with longevity that will still be around for years to come.
Hjcranford has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola. The Motley Fool owns shares of General Electric Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!