The Dow Jones Industrial Average often called the Dow 30, is a stock market index of 30 leading U.S. publicly traded companies. Most of the 30 Dow companies are blue-chip names and widely held stocks with large market capitalizations. As such, the Dow 30 is a bellwether for the health of the overall stock market but also the U.S. economy.
The Dow is also one of the oldest stock indices in the U.S. Charles Dow founded the index in 1896 and also co-founded The Wall Street Journal newspaper. Familiar names in the Dow Jones Industrial Average include McDonald’s (NYSE:MCD), Nike (NYSE:NKE) and Microsoft (NASDAQ:MSFT), among others.
Despite its pedigree, the Dow is not guaranteed to outperform other indices or the entire market. So far in 2023, the Dow Jones Industrial Average is up 4%, trailing both the S&P 500 index which has gained 16% year to date, and the tech-laden Nasdaq index which has increased 40% since January. Many stocks in the Dow are in the red for the year, and some have long-term structural problems. These are the ONLY three Dow stocks to consider in August 2023.
Apple (AAPL)
While it is true that shares of Apple (NASDAQ:AAPL) have sunk since the company issued its second-quarter financial results in early August, the stock has not fallen that far. Furthermore, the bleeding looks to have stopped. Over the last month, AAPL stock is down 6%. However, the share price has held above $180 and the stock is still up 40% on the year. Apple is still a great long-term investment and one of the very best technology securities investors can own.
Analysts might be concerned that sales of Apple’s hardware devices such as the iPhone and Macbook computer continue to decline worldwide. However, those sales decreases have been overtaken by stronger sales of the company’s services such as its App Store and Apple TV, which grew 8% on an annual basis in Q2 of this year. The company’s recent Q2 results did manage to beat Wall Street expectations, with earnings per share of $1.26 versus $1.19 that had been forecast.
Plus, Apple has a potentially big upcoming catalyst for its stock with the launch of its Vision Pro virtual reality headset, the company’s first completely new product in more than a decade. AAPL stock is up 235% over the last five years.
Coca-Cola (KO)
Coca-Cola (NYSE:KO) is among the most stable and reliable stocks listed in the Dow Jones Industrial Average. Often likened to a bond, KO stock is not prone to big price swings, with the share price hovering around $60 for the last 12 months. This makes Coca-Cola’s stock attractive to investors seeking stability and securities that remain steady in periods of market volatility. Coca-Cola is also attractive because of its hefty and ever-growing dividend payment.
Coca-Cola is known as a “Dividend King,” a company that has raised its quarterly dividend payout to shareholders for more than 50 consecutive years. KO stock currently has a dividend yield of 3.05%, which is nearly double the average dividend yield of 1.6% found among stocks listed on the S&P 500 index.
Owing to the mature and stable nature of its beverage business, there is little danger of Coca-Cola lowering its dividend, which currently pays 46 cents a share each quarter, making it a top Dow stock to buy.
JPMorgan Chase (JPM)
These are tough times for bank stocks, what with S&P Global (NYSE:SPGI) and Moody’s (NYSE:MCO) alternatingly lowering their ratings and outlook on U.S. lenders. However, if there is one stable bank stock to buy on the dip, it is the Dow component JPMorgan Chase (NYSE:JPM). The financial firm is the largest lender in the world with $3 trillion in assets.
Fueled by strong earnings in the face of sector volatility, JPM stock is up 9% year to date. While that trails the benchmark S&P 500 index’s 16% gain, it’s better than most bank stocks.
Currently trading at just nine times future earnings, JPM stock looks undervalued at current levels. Additionally, JPMorgan’s stock pays a strong quarterly dividend of $1.05 per share, giving it a yield of 2.70%. These factors should make this top Dow stock attractive to investors. The lender’s recent Q2 results were exceptional. JPMorgan reported that its Q2 net income, or profit, rose 67% to $14.5 billion due to rising income from higher interest rates. The company attributed the strong print to a 44% increase in its net interest income to $21.9 billion.
On the date of publication, Joel Baglole held long positions in AAPL and MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.