Investors seeking a safe haven for their money have been flocking to Dow Jones Industrial Average stocks since the beginning of 2022. While these companies may not offer much excitement, they provide dependable returns. This will help you make it through until December without risking too much on an unpredictable market.
The Dow is a popular index for tracking the performance of America’s top companies. But it doesn’t mean these stocks are invincible!
Just because they’re in the Dow doesn’t mean you can trust them to be good investments, even if that is what Wall Street wants us all to think. Nevertheless, these stocks tend to be industry leaders and are much higher quality than other holdings in the market. With the stock market in shambles, let’s look for the most attractive Dow stocks at this time.
|The Travelers Company
|International Business Machines
Dow Stocks to Buy: Coca-Cola (KO)
Consumer staples giant Coca-Cola (NYSE:KO) delivered a better-than-expected second-quarter earnings report while its management hiked its guidance for the full year. It has reaffirmed its position as a market juggernaut posting strong fundamentals. Despite the current headwinds, its shares have outperformed the market by a considerable margin. With an incredible track record, it remains a leader that can continue posting robust returns over the long run.
In the second quarter, non-GAAP earnings per share of 70 cents rose 4% on a year-over-year basis, coming in three cents over the consensus. Moreover, net sales of $11.3 billion shot up 12%. KO has benefitted from retiring over 200 of its products to streamline its business and focus on the more profitable areas. The opportunity is to consolidate its position by leveraging its logistics infrastructure and other relationships.
The Travelers Companies (TRV)
The Travelers Companies (NYSE:TRV) is one of the top providers of property and casualty insurance. Its shares rose around 8.1% in value in the first six months of the year, outperforming the S&P 500, which traded in the red. Insurance businesses such as TRV are part of a handful of industries that can effectively shield themselves from risk. They can raise prices without having much of an impact on demand, making them robust investments when inflation is high.
It recently reported its second-quarter results, which showed plenty of positives. The negative elements with earnings were due to one-off events, helping the business earn an underwriting profit across every line of business apart from personal insurance. On top of that, it offers a handsome dividend yield of over 2.3%, with dividend growth over 16 years.
Dow Stocks to Buy: American Express (AXP)
American Express (NYSE:AXP) is amongst the crème da le crème in the payment processing realm. A massive part of the company’s revenue growth over the years relates to travel and tourism, with further growth supported by a recovery in this sphere.
With the expected ramp-up in travel demand, revenues from the sector are likely to trend northward. It boasts one of the strongest travel business models in the hospitality sector, with partnerships with some of several leading brands in the space. AXP conducted a survey earlier this year, where 86% of the participants stated that they expect to spend more or the same on travel this year compared to an average pre-pandemic year.
International Business Machines (IBM)
Tech giant International Business Machines’ (NYSE:IBM) second quarter results were weighed down by the U.S. dollar, which has gone up sharply due to aggressive interest rate hikes from the Federal Reserve. Nevertheless, its business is leaner than ever, with many of its businesses performing at a heartening pace. Consequently, its free cash flows have soared, growing to $3.3 billion compared to $2.6 billion during the first half of 2021. For the full year, IBM still expects to make $10 billion in FCF, up from $6.5 billion in 2021.
Furthermore, its consulting business has been booming, with sales up an incredible 18% during the second quarter. Moreover, its software sales, driven by Red Hat, grew at an impressive 12% in the quarter. On top of that, mainframe revenues shot up 77% in the second quarter, driving infrastructure sales 25% higher. Therefore, there’s plenty to be optimistic over with IBM stock in the future.
Dow Stocks to Buy: Verizon Communications (VZ)
Telecom giant Verizon Communications’ (NYSE:VZ) stock is trading at multi-year lows. Its second-quarter report was underwhelming, a testament to how tough business conditions are at this time. Nevertheless, its FCF forecast concerns investors the most, as it directly impacts dividend payouts. Its business continues to generate massive cash flows, and near-term troubles aren’t likely to impact the firm’s long-term positioning.
Even with a lower FCF, it should be able to cover its dividend payments without any hiccups. It achieved a massive $7.2 billion in FCF in the first six months of the year, so all eyes would be on how the firm can secure in the second half of the year.
Nevertheless, its dividend yield is at a fantastic 5.7%, with a payout ratio close to 47.6%.
Salesforce (NYSE:CRM)is a cloud computing giant that has grown its top line by double digits in the past five years. Its diversified cloud business caters to an array of large and mid-cap companies with incredible growth profiles. Moreover, its impressive wealth compounder has generated over 440% returns for its investors in the past decade.
The cloud computing titan’s recent reports have been extraordinary considering the market situation. Moreover, its gross margins held up well despite the challenges presented by the market. Additionally, its levered FCF margin growth on a year-over-year basis is at over 33%. It forecasts an operating cash flow bump of approximately 22% in the current year, which should take its free cash flows to over $6.5 billion.
With the massive growth runway of its profitable verticals and its constant expansion, its total addressable market could grow to a mind-boggling $284 billion by 2026.
Dow Stocks to Buy: Disney (DIS)
Entertainment giant Disney (NYSE:DIS) has been on a roll of late. The content produced by its media franchises has generated millions in revenue at the box office. Moreover, its aggressive push into streaming has paid many dividends. It bought out Twenty-First Century Fox in 2019 along with Hulu. It later launched Disney+, which has seen explosive growth in subscription numbers so far.
From the first quarter of 2020 to the second quarter of 2022, it has grown its subscribers by a whopping 420%. Additionally, its parks and recreation business has made a remarkable comeback, posting record results in its second quarter. Layer that up with its eye-catching content slate in the upcoming months and DIS stock could be set for some hefty gains.
Near-term headwinds are likely to weigh down its results in the interim, but its businesses offer healthy upside potential over the long run.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.