7 Stocks the Dow Has Liked for a Long Time

The Dow Jones Industrial Average (INDEX: ^DJI), as the name suggests, started out by tracking the leading U.S. industrial companies of the late 19th century. It has since widened its scope beyond traditional heavy industries, but it still tracks the movement of 30 large companies during daily trading sessions. A scaled average of these companies is reported throughout the trading day, and like the S&P 500, it's used to track the general health of the stock market, if not the entire U.S. economy.

Some very familiar names have been on the index the longest. Without fail, these companies have generated shareholder value, both in the form of dividends and growth. Three of the companies make the grade as "dividend aristocrats," paying and increasing their dividend for at least 25 years. The other four have long histories of paying dividends, including one that has been paying quarterly dividends uninterrupted since 1899! What companies are they?

Company

Industry

Date Added to DJIA

Dividend Yield

30-year CAGR

General Electric (NYSE: GE  ) Conglomerates Nov. 7, 1907 3.6% 12.5%
ExxonMobil (NYSE: XOM  ) Oil and gas Oct. 1, 1928 2.4% 15.3%
Procter & Gamble (NYSE: PG  ) Consumer goods May 26, 1932 3.2% 14.7%
DuPont (NYSE: DD  ) Chemicals Nov. 20, 1935 3.7% 11%
United Technologies (NYSE: UTX  ) Conglomerates March 4, 1939 2.6% 14.3%
Alcoa (NYSE: AA  ) Aluminum June 1, 1959 1.2% 6.8%
3M (NYSE: MMM  ) Conglomerates Aug. 9, 1976 2.8% 12.2%

Sources: DJIndexes.com, FinViz.com, and Yahoo! Finance.


Been a long time

General Electric was added to the Dow Jones when such stalwarts as U.S. Steel and Amalgamated Copper were ruling the list. The uninterrupted dividend since 1899 belongs to GE, including a 32-year streak with annual increases before the 2008 financial crisis. Throw in GE's growth opportunity in China, and you have a large company that shouldn't be ignored.

ExxonMobil was added to the Dow Jones list when it was known as Standard Oil of New Jersey, one of the 34 companies that came into existence as a result of the breakup of Standard Oil and its monopoly. Renamed Exxon in 1972, it later merged with Mobil in 1999, resulting in the oil-and-gas behemoth that exists today. It had long been the largest company based on market cap until being briefly passed by Apple earlier this year. It has since resumed top-dog status, and as the leading U.S. producer of natural gas, it's poised to stay there.

One of our "dividend aristocrats," Procter & Gamble has paid dividends since 1891, with 55 consecutive years of increases. It joined the Dow roster along with Coca-Cola and IBM, companies that were later replaced by others on our list. P&G, the consumer-goods leader with 24 different billion-dollar brands, has outlasted more than a few recessions in its 174-year history. It provides staple products in American households, including a brand that's a member of the "lipstick index."

Out with the old
DuPont replaced Coca-Cola on the Dow in 1935, with Coke not returning until 1987. It currently has the highest yield of these long-term Dow stalwarts and has paid a dividend since 1904. On top of that, the chemical company's dividend looks reasonably strong based on a variety of factors. As a company that creates products for use in a variety of industries, DuPont can weather most any storm and has more than 200 years of success to proves it.

When the next company replaced IBM on the Dow in 1939, it was known as United Aircraft. It has since become megaconglomerate United Technologies, the parent company of companies such as Sikorsky Aircraft, Pratt & Whitney, Otis Elevator, Carrier, and Hamilton Sundstrand. This diversification helps protect the diverse company from looming cuts to its defense-heavy subordinates. Throw in that a recent acquisition helps the company lower some costs, and it looks like United Technologies will be an industry leader for a long time.

Some troubles ahead?
Aluminum producer Alcoa has typically led off quarterly earnings reports, and it kicked off the latest quarter with some less than stellar news. That said, the former Aluminum Company of America has stayed in the Dow far longer than the other three companies added in 1959. Alcoa has the smallest dividend and return of the seven companies on the list, and Boeing's recent switch to carbon composite airplanes might force future aluminum prices down.

The baby of the group
The "youngest" company currently on the Dow is not a young company. 3M has been around in some form since 1902, starting out as the Minnesota Mining and Manufacturing Company. The company has a large stable of products, including Post-it notes, Scotch Tape, Bondo, and Ace bandages, among others. This diverse product line has allowed this "dividend aristocrat" to increase its annual dividend for 53 years. You can't deny the power of 3M's dividend since the 1960s, and it's a great stock for the long haul.

A great place to start
The folks at Dow Jones have simply created an index that looks at 30 important stocks. A company's placement on the list does not guarantee a great stock, but these seven companies have been in the Dow for a while. I think it means that these companies can be expected to continue along a similar growth path for the foreseeable future.

In fact, two of these companies have made the grade and are included on our free report "13 High-Yielding Stocks to Buy Today." To find out which two made the cut, sign up for the free report while it's still available.

Fool contributor Robert Eberhard was not alive to see any of these stocks get added to the Dow Jones and does not own shares in any company mentioned here. Follow him on Twitter, where he goes by @GuruEbby. The Motley Fool owns shares of Coca-Cola, Apple, and IBM. Motley Fool newsletter services have recommended buying shares of Coca-Cola, 3M, Procter & Gamble, and Apple, as well as creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.


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