Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



These Unpopular Dow Stocks Paid Off for Investors

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

You won't find a more popular measure of the stock market's health than the Dow Jones Industrials (DJINDICES: ^DJI  ) . With each of its 30 components holding a leadership position in their industries, many of the Dow's members are household names around the world.

Yet not every Dow stock is equal in the eyes of traders on Wall Street and elsewhere, as some stocks get a lot more trading activity on a daily basis. What's surprising is that some of the least popular stocks among traders have actually produced the best returns. Let's look at four Dow stocks with lowest trading volume that have nevertheless crushed the Dow's return.

Most unpopular: Travelers
Insurance giant Travelers (NYSE: TRV  ) has the lowest average daily trading volume of any Dow stock, at just 1.45 million shares. The company has a fairly high share price, but even so, no other Dow member has a smaller dollar volume than Travelers.

Yet over the past five years, Travelers has produced a 150% total return, beating the Dow's return over that period by about two-and-a-half times. One big reason is that back in 2008, Travelers and the rest of the financial industry was dealing with the full brunt of the financial crisis. The cash crunch threatened the capital markets and made it difficult to predict how Travelers could manage its investment portfolio to pay claims. Yet the company has weathered several bad storms since, and a relatively quiet year so far in 2013 has helped the stock hit new highs.

How 3M got its groove back
(NYSE: MMM  ) is the next least-traded stock in the Dow, with just about 2 million shares trading daily. It has a triple-digit share price, which depresses volume somewhat. Its gains haven't been quite as strong as Travelers, but its 112% total gain since 2008 almost doubles the Dow's return.

3M is best known for its consumer products, but the company is actually a huge conglomerate and has been finding growth from its core industrial business recently. A sharp ramp-up in activity in the aerospace industry could further improve 3M's prospects, as it produces abrasives, tapes, and glues that are essential for aircraft to function properly. In addition to substantial presence in renewable energy, 3M is involved in the right niche industries to drive future growth.

Flying higher with United Tech
United Technologies
(NYSE: UTX  ) is in much the same situation as 3M, trading just 2.11 million shares but carrying a triple-digit share price that in some ways discourages trading activity. Its 115% return over the past five years is similar to 3M's as well.

United Tech can point to the aerospace boom even more than 3M as a driver of growth. With the combination of its Pratt & Whitney and Goodrich businesses, United Tech has made a big bet on the future of the aerospace industry. At least so far, that bet is paying off, and even with some short-term threats related to the government shutdown and its defense business, any dip in the shares should be a good buying opportunity in the long haul.

A huge new Dow winner
(NYSE: V  ) is the best performer on our list, producing total returns of almost 250% over the past five years. It only trades 2.34 million shares on average, making it the fifth least popular Dow stock after DuPont and the stocks mentioned above. Visa's share price is the most expensive of any Dow stock right now, which again perhaps explains its lack of popularity.

Visa's business, though, has been firing on all cylinders in recent years. Even at the depths of the 2008 financial crisis, Visa held its own quite well in comparison to many of its financial-sector peers, largely because it didn't bear any credit risk from its business model. With many parts of the world only having begun to tap electronic payments, Visa still has plenty of room to grow, and as it moves into mobile payments and other new areas, Visa should be able to remain a leader in its industry.

Making money is always popular
Many investors are averse to high share prices, but these high-priced stocks have produced some impressive returns. Looking where others fear to tread is often a smart investing strategy, and it has definitely worked for Dow investors lately.

Dow stocks for dividend lovers
Another great way to make money is by focusing on dividend stocks. Check out The Motley Fool's brand-new special report, "The 3 Dow Stocks Dividend Investors Need," and you'll learn more about 3M, which is one of the stocks that makes the cut. It's absolutely free, so find out which other stocks have what it takes to deliver great long-term returns to shareholders. Simply click here now and get your copy today.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2670053, ~/Articles/ArticleHandler.aspx, 8/30/2016 9:22:39 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 12 hours ago Sponsored by:
DOW 18,502.99 107.59 0.00%
S&P 500 2,180.38 11.34 0.00%
NASD 5,232.33 13.41 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/29/2016 4:33 PM
^DJI $18502.99 Up +107.59 +0.00%
MMM $180.50 Up +1.09 +0.00%
3M CAPS Rating: *****
TRV $118.48 Up +1.34 +0.00%
The Travelers Comp… CAPS Rating: ****
UTX $107.97 Up +0.66 +0.00%
United Technologie… CAPS Rating: ****
V $80.87 Up +0.30 +0.00%
Visa CAPS Rating: *****