Best Tech Stocks in the Dow Index
The Dow Jones Industrial Average (DJIA) has eclipsed $20,000.00. What investors and analysts alike hungrily awaited followed soon after the beginning of the new year, driving expectations sky-high for 2017. The index continues to hit all-time bests, and this makes it one of the strongest collection of stocks on the market.
President Donald Trump, it seems, has so far been good for business. While it’s all fine and dandy that the DJIA is doing well overall, for the average investor looking to go beyond indices, we’ll tackle which are the best tech stocks in the Dow index. Whether they are stocks with the highest dividend yield or simply ones poised to surge in 2017, we’ll look at the best of the best tech stocks included in the Dow 30.
While the Dow Jones index isn’t exactly known for its large number of tech stocks, the ones that are included on the list are all big players. The Dow 30 represents some of the most profitable, most powerful, and largest companies in the world, so don’t expect to be playing with any penny stocks on the index.
Though things were looking rough in the run-up to the 2016 U.S. presidential election, the DJIA has since bounced back and been on a rip-roaring run in the aftermath of the political race.
Chart courtesy of StockCharts.com
While the November 7 victory of Donald Trump over Hillary Clinton has left some analysts worried as to where the economy will head under a more. . .unpredictable president than the country has been used to in the past eight years (and maybe ever), others view a Trump presidency as a huge potential boon to business.
With that in mind, some of the best tech stocks in the Dow index have been surging since the beginning of 2017, and at the moment show no signs of slowing down.
Now let’s get on to the top Dow Jones stocks in the tech sector.
Tech Stocks List Under Dow
As mentioned before, there isn’t exactly a ton of tech-related tickers available on the Dow Jones index, but that doesn’t mean there isn’t value in the tech stocks contained within the DJIA.
The following companies are hardly under-the-radar picks, but they are all well run businesses with strong growth potential, not to mention they are stocks with the highest dividend yield around.
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I told you these wouldn’t be under-the-radar picks.
Apple Inc. (NASDAQ:AAPL) is one of the most prominent businesses in the world, and for good reason. The company still holds a dominant market share as a smartphone and tablet producer. It has also positioned itself as a cultural touchstone, with Apple product launches inspiring fervor usually reserved for sports teams and religious institutions.
None of this news. But what makes the company one of the top Dow Jones stocks in the tech sector is that Apple’s 2017 outlook is shaping up to be pretty fantastic.
First, you have analysts and consumers both eagerly awaiting the “iPhone 8” and its game-changing potential. With the company experiencing its first-ever year-over-year “iPhone” sales decline in two quarters in 2016 (Q3 and Q4) there was certainly pressure for the company to come out strong in 2017.
While so far sales are back on track, growing in Q1 2017 over the previous year, most analysts are more excited for the next iteration of the iPhone and its potential affects on AAPL stock.
The 10th-year-anniversary model is receiving a ton of love from Apple’s research and development (R&D), and the company seems dead-set on making this generation of the iPhone a revolutionary one. Consider the rumors that the iPhone 8 will feature augmented reality (AR) capabilities.
Couple those whispers with some big statements made by CEO Tim Cook earlier this year regarding AR tech, and you have plenty of reason to be hopeful for a big move in AR from Apple.
“I regard it as a big idea like the smartphone,” said Cook in an interview with the Independent. “The smartphone is for everyone, we don’t have to think the iPhone is about a certain demographic, or country or vertical market: it’s for everyone. I think AR is that big, it’s huge.”(Source: “Apple CEO Tim Cook: As Brexit hangs over UK, ‘times are not really awful, there’s some great things happening’,” The Independent, February 10, 2017.)
Analysts too have been pushing the idea of a surging Apple, raising price forecasts as the stocks continue to surge. Apple has gained 18% since the beginning of 2017, nearly 23% over the past three months and over 41% in the past 12 months. Those are solid numbers, especially for a company paying out an annual dividend of $2.28.
Another huge boon for Apple in 2017 is the potential for a tax repatriation rate of 10% that Trump has been pushing. Apple, along with several other tech giants, would greatly benefit from such a policy, allowing them to bring back funds to the U.S. that they’ve otherwise been stashing overseas to avoid the 35% corporate tax rate. (Source: “The Best Stocks to Own If Trump Brings Foreign Cash Home,” Fortune, January 23, 2017.)
Consider that Apple has been saddled with nearly $75.0 billion in long-term debt since its near-zero levels in 2013. Being allowed to reinvigorate itself with a huge windfall of cash from abroad would help the company keep its lofty investing ambitions alive while also avoiding taking on any more substantial debt.
Both the iPhone 8 and the tax holiday could be huge for Apple stock in 2017, and that’s why it starts off our tech stocks list under Dow.
2. Intel Corporation (NASDAQ:INTC)
Remember how big Tim Cook is on AR technology? Assuming that the CEO of one of the most profitable companies on Earth knows what he’s talking about, AR could be the start of another tech revolution, not unlike the one sparked by the smartphone.
If that’s that case, consider Intel Corporation (NASDAQ:INTC) stock.
INTC has been quite stagnant over the recent past, gaining only about two percent over three months. Extend that a little longer out, however, and you have over 21% gains in the past 12 months.
But what’s really exciting for Intel is the growth potential in the chip market.
As we’ve seen with smaller rivals NVIDIA Corporation (NASDAQ:NVDA) and Advanced Micro Devices, Inc. (NASDAQ:AMD), chips are back. Both of the smaller-share computer chip companies grew exponentially in 2016 and are looking to keep that momentum going into 2017.
INTC stock, owning a much larger market cap than those other two chipmakers, naturally didn’t see such a wild explosion in value, but these three companies are all set to benefit from a new emphasis being put on machine learning, AI, and other tech that rely heavily on their products and technological advancements.
Take, for instance, Intel’s forays into the AR and virtual reality (VR) sectors, as well as muscling into the hot gaming market where the chips will serve VR gamers by speeding up their rigs. (Source: “Why Intel Corporation Is So Excited About Virtual Reality,” NASDAQ, February 13, 2017.)
And then the company is also cozying up to Trump, with CEO Brian Krzanich meeting with the president himself, sparking the revival of an Intel factory in Arizona. The project will cost $7.0 billion and will employ up to 3,000 people, which fits right in to Trump’s economic plan. (Source: “Intel CEO reveals what it is really like to meet with President Trump in the White House,” Yahoo! Finance, February 13, 2017.)
And finally, what makes INTC one of the best tech stocks in Dow index is its dividend. At a 2.87% yield, you have one of the better dividend payouts available, Dow Jones or no.
3. International Business Machines Corp. (NYSE:IBM)
International Business Machines Corp. (NYSE:IBM) alone is responsible for nine percent of the Dow’s run of more than 1,700 points since the day after Trump’s victory, November 8, 2016.
Speaking of Trump, IBM’s CEO Ginni Rometty was named as an early business adviser to the president’s transition team. Access to the most powerful figure in the land can rarely be bad for business, and IBM stock has had no trouble in 2017 so far, jumping over eight percent. (Source: “Two tech stocks helped power Dow to 20,000,” USA Today, January 25, 2017.)
Then you have some of the most interesting innovations around coming out of IBM. Their “Watson” artificial intelligence (AI)—a reigning Jeopardy! champ—is making big forays into cognitive computing and the Internet of Things fields, both of which are slated for big growth in coming years.
Fellow Dow Jones member Visa Inc (NYSE:V), for instance, announced that it is embedding IBM Watson technology into its devices to ease along digital payments. (Source: “Watson Turns IBM Into A Serious Contender In The Industrial IoT Market,” Forbes, February 27, 2017.)
Factor in IBM’s strong dividend of 3.11%—good for an annual dividend of $5.60—and you have what makes for one of top Dow Jones stocks in the tech sector.
Final Word on Top Tech Stocks to Buy in Dow Jones
The best tech stocks in the Dow index aren’t exactly hiding. After all, there’s only a handful of them and they are all quite strong, performing well in 2017 and under the current administration.
But the ones mentioned above all show huge potential not only in the short term, but in projections for years to come due to their insistence on developing innovative tech.
Whether it’s Apple’s push for AR or IBM’s love of machine learning and AI, there’s a lot of momentum building up around these tech behemoths. With Intel producing chips for both of those new technologies, you can see which way the pendulum is swinging. As we enter a new world filled with digital realities manifested by our phones or AI making cashless payment systems more efficient, the companies that can master these emerging techs stand to make a killing. IBM, Intel, and Apple may just be three of the biggest stocks that will ride that wave.