For many years before the advent of electronic and computer-driven trading, the Dow Jones industrial average ruled the investing world. Created in 1896 by Charles Dow, it originally consisted of 12 companies, each considered a giant in its sector. The Dow was introduced early in The Wall Street Journal as the first index of stock market activity. While the companies in the venerable index have changed many times since 1912, it is still considered one of the elite indexes in the world of investing.
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It is overshadowed this year by the spectacular rise in the Nasdaq, which is up 28.60% as of the close Friday. This is due to the artificial intelligence explosion and the rise of the Magnificent 7. Meanwhile, the Dow is up just 0.83% in 2023.
Three of the Magnificent 7 reside in the venerable index. They are offering investors a very good entry point and have not had the parabolic move higher than Nvidia and Meta Platforms have had this year. All the following stocks come with dependable dividends, and as one would expect all are rated Buy at top Wall Street firms. However, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Apple
Despite some exciting new products like the iPhone 15, the stock has lagged dramatically. Apple Inc. (NASDAQ: AAPL) designs, manufactures and markets consumer electronics worldwide, including the iPhone line of smartphones, the Macintosh family of notebook and desktop computers, iPad multi-purpose tablets, and such wearables and accessories as AirPods, Apple TV, Apple Watch, Beats and HomePod.
It also provides AppleCare support and cloud services, and it operates various platforms, including the App Store, that allow customers to discover and download applications and digital content, such as books, music, video, games and podcasts.
Its services include Apple Arcade, a game subscription service; Apple Fitness+, a personalized fitness service; Apple Music, which offers users a curated listening experience with on-demand radio stations; Apple News+, a subscription news and magazine service; Apple TV+, which offers exclusive original content; Apple Card, a co-branded credit card; and Apple Pay, a cashless payment service. Apple also licenses its intellectual property.
The company serves consumers, and small and mid-sized businesses and the education, enterprise and government markets. It distributes third-party applications for its products through the App Store. The company also sells its products through its retail and online stores, and direct sales force, as well as third-party cellular network carriers, wholesalers, retailers and resellers.
Shareholders receive just a 0.55% dividend. Wedbush’s $240 target price on Apple stock is a Wall Street high. The consensus target is $200.11, and shares closed on Friday at $177.49.
Cisco
Investors who are more conservative may want to consider this mega-cap tech leader, which posted outstanding quarterly results earlier this year. Cisco Systems Inc. (NASDAQ: CSCO) designs, manufactures and sells internet protocol (IP) based networking products and services related to the communications and information technology industry worldwide.
Cisco provides switching products, including fixed-configuration and modular switches, and storage products that provide connectivity to end users, workstations, IP phones, wireless access points and servers, as well as next-generation network routing products that interconnect public and private wireline and mobile networks for mobile, data, voice and video applications.
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Its cybersecurity products give clients the scope, scale and capabilities to keep up with the complexity and volume of threats. Putting security above everything helps corporations innovate while keeping their assets safe.
The networking giant is morphing into a cybersecurity and observability leader. In a recently announced definitive agreement, Cisco intends to acquire Splunk for $157 per share in cash. That represents approximately $28 billion in equity.
Investors receive a 2.94% dividend. Raymond James has set its target price at $65. The consensus is just $50.23, and Cisco Systems stock closed at $53.45 on Friday.
IBM
This blue chip giant still offers investors quite a solid entry point. International Business Machines Corp. (NYSE: IBM) is a leading provider of enterprise solutions. It offers a broad portfolio of IT hardware, business and IT services, and a full suite of software solutions. The company integrates its hardware products with its software and services offerings in order to provide high-value solutions.
Analysts have cited the company’s potential in the public cloud as a reason for their positive outlook going forward. The cloud proved to be big when the company posted a strong second quarter earnings report. The open hybrid cloud technologies of Red Hat, the software giant the firm bought in 2019, are now paired with the unmatched scale and depth of IBM’s innovation and industry expertise, and its sales leadership in more than 175 countries.
IBM stock comes with a 4.69% dividend. The $188 Royal Bank of Canada price target is a Wall Street high. The $146.76 consensus target is closer to Friday’s $142.03 closing share price.
Intel
This legacy leader in semiconductors has been hammered, and while some feel it is a value trap, it is hard to count out the company that defined the semiconductor revolution. Intel Corp. (NASDAQ: INTC) designs, manufactures and sells integrated digital technology platforms worldwide.
The platforms are used in various computing applications, comprising notebooks, two-in-one systems, desktops, servers, tablets, smartphones, wireless and wired connectivity products, wearables, retail devices and manufacturing devices, as well as for retail, transportation, industrial, buildings, home use and other market segments.
Intel announced over a year ago that it would invest significantly to build potentially the world’s largest chip-making complex in Ohio, looking to boost capacity as a global shortage of semiconductors affects everything from smartphones to automobiles. Intel says the 1,000-acre “mega-site” northeast of Columbus has room for as many as eight plants, known as “fabs.” The company estimates it would require a $100-billion investment to fully build and equip those plants.
The dividend yield here is 1.42%. The Needham price target is $40, and Intel stock has a consensus target of $35.07. On Friday, shares closed at $36.19.
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Microsoft
This is a more conservative way for investors to participate in the massive cloud growth. Microsoft Inc. (NASDAQ: MSFT) develops, licenses and supports software, services, devices and solutions worldwide. The company operates in the following three segments.
The Productivity and Business Processes segment offers Office, Exchange, SharePoint, Microsoft Teams, Office 365 Security and Compliance, Microsoft Viva, and Skype for Business; Skype, Outlook.com, OneDrive and LinkedIn; and Dynamics 365, a set of cloud-based and on-premises business solutions for organizations and enterprise divisions.
The Intelligent Cloud segment licenses SQL, Windows Servers, Visual Studio, System Center and related Client Access Licenses. GitHub provides a collaboration platform and code hosting service for developers, while Nuance provides health care and enterprise AI solutions, and Azure is a cloud platform. It also offers enterprise support, Microsoft consulting and nuance professional services to assist customers in developing, deploying and managing Microsoft server and desktop solutions, as well as training and certification on Microsoft products.
The More Personal Computing segment provides Windows original equipment manufacturer (OEM) licensing and other non-volume licensing of the Windows operating system; Windows Commercial, such as volume licensing of the Windows operating system, Windows cloud services and other Windows commercial offerings; patent licensing; and Windows Internet of Things.
This segment also offers Surface, PC accessories, PCs, tablets, gaming and entertainment consoles and other devices; Gaming, including Xbox hardware and Xbox content and services; video games and third-party video game royalties; and Search, including Bing and Microsoft advertising. The company sells its products through OEMs, distributors and resellers, as well as directly through digital marketplaces, online stores and retail stores.
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