There's a broad subset of investors with a strong infatuation for members of the Dow Jones Industrial Average. These businesses are well-established, and the stocks often provide regular streams of passive income through dividend payments. Most of these investments pay cash out quarterly, and often the payouts get an annual boost, no matter where we are in the economic cycle.
By narrowing your focus on these industry leaders, you can increase the potential to find stocks with attractive growth prospects. Here are two worth considering.
1. McDonald's
McDonald's (MCD -0.91%) Big Mac has been popular with fast-food fans for over 50 years. The restaurant chain is popular with income investors, in part, because it has hiked its dividend for an equally impressive 46 consecutive years.
Look closer at the business, and you'll see just how McDonald's has been able to achieve this impressive financial feat. Comparable-store sales were up 12% in the most recent quarter and by 10% in the U.S. market. At a time when many consumers are looking to save cash and maximize convenience, McDonald's is serving these needs well and is being rewarded with a rising market share.
"The McDonald's brand has never been stronger," CEO Chris Kempczinski told investors in late August. Profit margins have never been this high, either. The chain now converts over 40% of sales into operating earnings thanks in part to a steady stream of franchise fees, royalty fees, and real estate income.
It's true that McDonald's needs to constantly respond to shifting consumer preferences. Getting behind in this area would open the door to rivals who are always looking for ways to chip away at its lead in the fast-food industry. But the company has demonstrated through the decades that it can adapt. That's a valuable attribute for any company that you'd want to keep in your portfolio for many years.
2. Apple
Apple (AAPL -0.35%) is another stellar Dow stock that's likely to send out bigger payments to its shareholders in a few decades. It dominates the global smartphone industry thanks to its long track record of innovation. And its push into services is really starting to impact the business. CEO Tim Cook in early August celebrated the milestone of Apple having crossed 1 billion paid subscriptions, after all.
Apple has among the most impressive finances on the planet. Cash flow was a whopping $26 billion in the most recent quarter, and that success allowed management to return $24 billion to shareholders through dividends and stock buybacks.
AAPL Cash from Operations (TTM) data by YCharts.
The tech industry will certainly look very different in 10 years. It's always possible that Apple will stumble from its leadership position in that time, especially if a string of poor product launches tarnishes the brand. Yet the company's track record points to a much more positive result.
If Apple can maintain its positive momentum, there's no reason why the company couldn't continue boosting annual earnings for many years. It is sitting on over $60 billion of cash and marketable securities today, after all.
No growth stock is a sure bet. But by focusing on businesses that command market share leads in growing industries, an investor can maximize their chances of accumulating positive returns well into the future.
