The Dow Jones Industrial Average is having a record year. The widely followed index broke the 40,000 mark in May for the first time. This week, the Dow topped 42,000 -- again setting an all-time high.
Should investors check out some of the top components of the Dow Jones index? I think so. Here are three magnificent Dow stocks to buy right now.
1. Amazon
Amazon (AMZN -0.87%) is handily beating the Dow Jones Industrial Average this year. Shares of the e-commerce and cloud services giant have soared 27%, compared to an 11% gain for the Dow. I think Amazon still has plenty of room to run.
The company has proven it can successfully adapt to changing environments. For example, Chief Executive Officer (CEO) Andy Jassy noted in Amazon's second-quarter earnings call on Aug. 1, 2024, that customers "continue to trade down on price when they can." Weeks later, Amazon launched its new Amazon Saver private label that offers low-cost grocery items, with most priced below $5.
I expect Amazon will continue to lower the costs of its e-commerce business and boost profitability with technological innovations, especially artificial intelligence (AI) and robotics. The company's technological prowess should also help it improve customer service and speed delivery.
However, Amazon's biggest growth opportunity could be in helping other organizations implement AI. Amazon Web Services (AWS) remains the leader in the cloud services market. It offers a wide range of tools to make deploying AI models easier and faster. AI adoption should accelerate the migration to the cloud -- and AWS is poised to be a key beneficiary.
2. The Home Depot
The Home Depot's (HD -0.77%) year-to-date gain of 14% looks quite good, considering its lackluster financial results. The home improvement retailer reported a meager year-over-year revenue gain in Q2 that would have been a decline if not for the acquisition of SRS Distribution. Home Depot's earnings also slipped from the prior-year period.
What's weighing on The Home Depot? CEO Ted Decker diagnosed the problem in his Q2 earnings call remarks: "[H]igher interest rates and greater macroeconomic uncertainty pressured consumer demand more broadly." As a result, consumers spent less on home improvement projects.
But the Federal Reserve is now riding to the rescue. The Fed announced a 0.5% reduction in interest rates, with more cuts likely on the way over the next few months. This should provide a spark for the homebuilding and home improvement markets.
More importantly, the long-term prospects for The Home Depot are strong. The median age of homes in the U.S. is over 40 years old. You can bet that the demand in the home improvement market will be healthy for a long time to come. With a 17% market share, The Home Depot should reward investors for a long time to come, too.
3. Verizon Communications
Verizon Communications (VZ 0.59%) is another major contributor to the Dow's record-setting performance in 2024. Shares of the telecommunications leader have jumped nearly 19%.
Sure, Verizon's revenue growth isn't anything to write home about. In Q2, total revenue increased by only 0.6% year over year. However, the company appears to be on the right track, with new services giving more choices to businesses and consumers.
The main draw for Verizon is its dividend program. Verizon's forward dividend yield tops 6%. The company has increased its dividend for 18 consecutive years, and I expect that impressive streak to continue.
I also think Verizon's future could be brighter than its recent past. The company is already reaping the rewards from its investment in AI to improve operations. To that end, 6G networks, which will support lots of new capabilities for wireless users, could also provide a significant tailwind for Verizon by the end of the decade.
