You can't beat Dow Jones stocks for stability and defense in a down market.
Although the Dow Jones Industrial Average has by no means escaped 2022's widespread shellacking in equities, the blue-chip barometer is indeed holding up better than the other two major market benchmarks.
The elite list of 30 large- and mega-cap stocks generated a total return (price plus dividends) of -5.3% for the year-to-date through April 12. The broader S&P 500's total return over the same span came to -7.4%, while the tech-heavy Nasdaq Composite delivered a total return of -14.4%.
Rising interest rates, the highest inflation readings in four decades, geopolitical jitters and COVID-19-related shutdowns in China have very much impaired the market's appetite for risk. That's where Dow Jones stocks come in.
This collection of industry-leading companies and dividend growth stalwarts with their battleship-like balance sheets can offer something of a safe harbor in tempestuous times.
To get a sense of which Dow Jones stocks Wall Street recommends at this juncture in an uncommonly uncertain year, we screened the DJIA by analysts' consensus recommendations, from worst to first, using data from S&P Global Market Intelligence.
Here's how the ratings system works: S&P surveys analysts' stock calls and scores them on a five-point scale, where 1.0 equals a Strong Buy and 5.0 is a Strong Sell. Scores between 3.5 and 2.5 translate into Hold recommendations. Scores higher than 3.5 equate to Sell ratings, while scores equal to or below 2.5 mean that analysts, on average, rate shares at Buy. The closer a score gets to 1.0, the higher conviction the Buy recommendation.
Read on as we show you how industry analysts rate all 30 Dow Jones stocks, and what they have to say about their prospects for the 12 months ahead.
Stock prices, analysts' recommendations and other data as of April 12, courtesy of S&P Global Market Intelligence and YCharts, unless otherwise noted. Stocks are listed by analysts' consensus recommendation, from lowest to highest.
- Market value: $84.6 billion
- Dividend yield: 4.0%
- Analysts' consensus recommendation: 3.19 (Hold)
Analysts became incrementally more bearish on 3M (MMM (opens in new tab), $148.58) during the first quarter. Sadly, that helped the industrial conglomerate extend its unenviable reign as Wall Street's least favorite Dow stock.
Sluggish-to-stagnant revenue, margin and earnings growth has made MMM stock a long-time market laggard. Snarled supply chains, input cost inflation and the company's limited ability to raise its prices have only added to the Street's collective gloom.
Be that as it may, the materials stock's terrible start to 2022 did prompt at least one analyst to lift his recommendation on MMM in early March – albeit to Hold from Sell.
"Without much pricing power, we expect 3M to see material margin compression in 2022 amid high inflation, especially with the manufacturer being a large consumer of oil, natural gas, and refined oil and gas products," says CFRA Research analyst Colin Scarola.
However, with 3M shares having declined as much as 21% for the year-to-date through March 11, they're "much closer to fair value in a high inflation and energy cost environment," the analyst says. "Accordingly, we lift our rating."
Scarola has plenty of company among his peers. Of the 21 analysts issuing opinions on MMM stock who are tracked by S&P Global Market Intelligence, two have it at Strong Buy, one says Buy and 12 call it a Hold. Sell calls are rare on the Street, so it's notable that three analysts rate 3M at Sell and three say Strong Sell.
29. Walgreens Boots Alliance
- Market value: $38.2 billion
- Dividend yield: 4.3%
- Analysts' consensus recommendation: 3.15 (Hold)
The Street hasn't budged from its consensus Hold recommendation on Walgreens Boots Alliance (WBA (opens in new tab), $44.23) for two years, and not a single analyst covering the stock expects it to outperform the broader market over the next 12 months or so.
Indeed, of the 20 analysts following the pharmacy chain, 18 rate shares at Hold, one says Sell and one calls it a Strong Sell. Sluggish revenue growth and stagnant margins have been familiar drags on past results, and WBA faces additional headwinds going forward into 2023.
Raymond James analyst John Ransom rates WBA at Market Perform (the equivalent of Hold), citing difficult comparisons against COVID-19-related results, the ending of tobacco sales and the sale of its Boots business.
Walgreen is shopping its Boots international drugstore chain to buyout firms, according to multiple reports.
WBA is also facing reimbursement pressure from insurers that will weigh on pharmacy gross margins, Ransom adds.
At the same time, management's earnings guidance is tepid.
"The company’s new growth plan anticipates 4% annualized earnings growth over the next three years, with a flat performance in fiscal 2022, accelerating through fiscal 2024," writes Argus Research analyst Christopher Graja (Hold).
Analysts forecast the company to generate average annual earnings per share (EPS) growth of just 2.5% over the next three to five years. As such, WBA, which trades at 8.6 times analysts' 2022 EPS estimate, would indeed appear to be fairly valued at current levels.
All this justifies one of the worst ratings among the 30 Dow Jones stocks.
- Market value: $190.1 billion
- Dividend yield: 3.1%
- Analysts' consensus recommendation: 2.83 (Hold)
Intel (INTC (opens in new tab), $46.50) shares have been stuck with a consensus recommendation of Hold for about two years, and the Street sees little reason to become more constructive on the semiconductor stock.
The world's largest chipmaker does have some remarkable strengths. Its central processing units (CPUs) are found in 84% of desktop PCs and 78% of laptops. INTC furthermore commands roughly 90% of the market for servers, which are in high demand amid the shift to cloud-based computing.
The downside is that the Dow stock missed out on some of the most important trends of the past 15 years, notably mobile, and is losing market share to competitors in core areas.
That helps explain the stock's high number of Sell calls, which are a scarce sighting on the Street. Of the 41 analysts issuing opinions on INTC, five have it at Sell and three rate it at Strong Sell. The remaining recommendations break down to seven Strong Buys, four Buys and a whopping 22 Holds.
BofA Securities analyst Vivek Arya rates shares at Underperform (the equivalent of Sell), citing a number of factors.
Increased competition from the likes of Advanced Micro Devices (AMD (opens in new tab)), Nvidia (NVDA (opens in new tab)) and Taiwan Semiconductor (TSM (opens in new tab)) loom large, Arya says. Then there's Intel’s "large exposure to the decelerating PC market," its "years of cash burn despite government incentives" and a "lowered quality of reported earnings," among other issues the analyst notes.
In more bullish news, INTC routinely makes the list of hedge funds' 25 top blue-chip stocks to buy.
- Market value: $44.4 billion
- Dividend yield: 1.9%
- Analysts' consensus recommendation: 2.76 (Hold)
Travelers (TRV (opens in new tab), $184.94) is another blue chip among the 30 Dow Jones stocks that has generated a distinct lack of analyst enthusiasm for a long time. Indeed, shares have carried a consensus recommendation of Hold for more than two years and counting.
Unfortunately, it appears an increasingly difficult global backdrop won't help TRV break out of its ratings slump anytime soon.
"The property-casualty insurance market was already 'hard,'" says CFRA Research analyst Catherine Seifert (Hold). "The Russian invasion of Ukraine will serve as a catalyst for further market hardening."
Although the P&C insurer is a "prudent underwriter that has managed its book of business well," Seifert remains cautious on TRV stock because the firm's growth rate remains below that of peers.
"We view the shares as fairly valued versus historical averages," writes Seifert, and that's pretty much the majority view on the Street. Of the 21 analysts issuing opinions on TRV, four rate it at Strong Buy and three call it a Sell, while 14 have it at Hold.
That tepid collective outlook is based partly on valuation. Analysts forecast Travelers to generate average annual EPS growth of just 4.3% over the next three to five years, and yet shares trade at 14.1 times the Street's 2022 EPS estimate.
To put that multiple in further context, TRV traded at an average of just 12.7 times expected EPS over the past five years, per data from Refinitiv Stock Reports Plus. As long as Travelers’ stock looks pricey compared to what it historically fetches, analyst upgrades will probably be in short supply.
- Market value: $133.5 billion
- Dividend yield: 3.1%
- Analysts' consensus recommendation: 2.70 (Hold)
The Street has become incrementally more bearish on Amgen (AMGN (opens in new tab), $250.04) over the past nine months or so, but the biotechnology company is not without its ardent fans.
Amgen specializes in cancer and autoimmune diseases, and it's presently enjoying success with cholesterol drug Repatha and plaque psoriasis treatment Otezla, among other therapeutics. Bulls are counting on new launches, such as oncology drug Lumakras and Tezspire for asthma, and the return of cash to shareholders to drive market-beating returns going forward.
"We view AMGN as well-positioned with a prudent strategy," writes Oppenheimer analyst Jay Olson, who rates shares at Outperform (the equivalent of Buy). "AMGN remains committed to dividend growth and share repurchases."
But a number of analysts are taking a more cautious approach until they can gauge the performance of new drugs. If current in-house bets fail to deliver, Amgen might need to overhaul its pipeline with a "transformative" deal, the thinking goes.
"Two key launches next year will likely dictate how much the company needs to target acquisition of late-stage assets," writes Raymond James analyst Dane Leone, who rates shares at Market Perform (Hold).
Of the 27 analysts issuing opinions on the stock, five rate it at Strong Buy, two say Buy, 18 call it a Hold and two say Strong Sell.
That said, AMGN is indeed off to a strong start in 2022, gaining 7.5% on a price basis in the first quarter. That beat the S&P 500 by more than 12 percentage points.
25. International Business Machines
- Market value: $113.3 billion
- Dividend yield: 5.2%
- Analysts' consensus recommendation: 2.63 (Hold)
International Business Machines (IBM (opens in new tab), $125.98) gets a lot of lukewarm reviews from analysts, which seems fair enough. After all, they've watched Big Blue's top line shrink relentlessly for more than a decade.
Four analysts rate IBM at Strong Buy, one says Buy, 13 call it a Hold and one says Strong Sell. That works out to a consensus recommendation of Hold – a rating the tech stock has languished at for years.
IBM spun off its managed infrastructure operations into a separate publicly traded company called Kyndryl Holdings (KD (opens in new tab)) in late 2021. The company now counts on hybrid cloud and artificial intelligence (AI) services as its main engines of growth.
Whether a leaner IBM can thrive in those highly competitive areas remains very much to be seen, analysts say.
Bulls, such as Argus Research's Jim Kelleher (Buy), applaud the "new" IBM's higher-margin, subscription-based revenue structure.
"The main difference at the new IBM is in margins," Kelleher says. "The more favorable business mix resulting from the focus on growth markets and the Kyndryl spinoff is expected to drive strong free cash flow generation, even on a substantially lower revenue base."
On the other side of the trade, UBS Global Research analyst David Vogt rates IBM stock at Sell, citing worries about the company's free cash flow generation after the Kyndryl spinoff, rising interest rates and "concerns around growth sustainability," among other factors.
If nothing else, IBM has always come through for income investors. This S&P 500 Dividend Aristocrat has increased its dividend for 26 consecutive years.
- Market value: $46.5 billion
- Dividend yield: 4.4%
- Analysts' consensus recommendation: 2.59 (Hold)
Dow (DOW (opens in new tab), $63.26) has been enjoying strong demand for packaging and consumer products related to the distribution of COVID-19 vaccines, but tangled supply chains and input cost inflation make some analysts leery of the name at current levels.
The specialty chemicals and materials company gets a consensus recommendation of Hold, but with a bullish tilt. Five analysts rate DOW at Strong Buy, two say Buy, 13 have it at Hold, one says Sell and one calls it a Strong Sell.
Argus Research analyst Bill Selesky (Buy) counts himself among those who forecast shares to deliver market-beating results in the year ahead.
"We expect Dow to benefit from stronger realized prices for commodity chemicals and increased demand in North America and China," Selesky says. "We also have a favorable view of Dow’s low cost structure, solid cash flow, declining capital spending requirements and sustainable dividend."
DOW stock beat the broader market by 16 percentage points in the first quarter, and yet it remains compellingly valued. Indeed, shares trade for just 9 times the Street's 2022 EPS estimate. That's well below their own five-year average of more than 15 times forward earnings, according to data from Refinitiv Stock Reports Plus. Furthermore, analysts forecast the company to generate average annual EPS growth of 6.3% over the next three to five years.
And yet logistical challenges and rising costs for energy and other commodities have the bulk of analysts sitting on the sidelines.
- Market value: $225.4 billion
- Dividend yield: 4.8%
- Analysts' consensus recommendation: 2.57 (Hold)
Analysts have become incrementally more bullish on Verizon (VZ (opens in new tab), $53.67) over the past six months, but they still give the communication services giant a consensus recommendation of Hold.
Five analysts rate VZ at Strong Buy, four say Buy, 18 call it a Hold and one says Strong Sell. Those remaining cautious on the name frequently cite VZ's heavy spending as a reason to stay on the sidelines.
Although the telco is enjoying gains in 5G subscribers and upgrades, investors should "expect near-term headwinds to margins from investments in marketing and device subsidies," says Deutsche Bank analyst Bryan Kraft (Hold).
At Oppenheimer, analyst Timothy Horan likewise cites higher expenses as part of his Perform (the equivalent of Hold) rating on shares.
On the brighter side, shareholders can look forward to some cost relief soon, the analyst adds. Capital expenditures are projected to peak this year as VZ brings its 5G C-band spectrum online, Horan says.
Among the bulls, Truist analyst Greg Miller rates shares at Buy, citing management's "credible plan for growth, margin improvement and share repurchases."
Miller also likes Verizon’s valuation, which does look attractive. Shares trade at 9.7 times the Street's 2022 EPS estimate. That offers a discount of nearly 17% to its own five-year average, according to data from Refinitiv Stock Reports Plus.
And certainly no analyst quibbles with the dividend. Verizon boasts the second highest yield of any Dow stock, thanks in no small part to 18 consecutive years of dividend increases.
22. JPMorgan Chase
- Market value: $386.7 billion
- Dividend yield: 3.0%
- Analysts' consensus recommendation: 2.38 (Buy)
JPMorgan Chase (JPM (opens in new tab), $131.54) is the first of our Dow Jones stocks to receive a consensus recommendation of Buy – albeit with pretty moderate conviction.
Of the 26 analysts issuing opinions, seven rate JPM at Strong Buy, six say Buy, 11 have it at Hold and two say Strong Sell.
No one disputes that JPM has an outstanding collection of business lines. Or that the nation's biggest bank by assets boasts an unparalleled management team, led by CEO Jamie Dimon.
It's simply that a number of analysts believe investors can find better bets in the company's sector.
"On most key bank metrics, JPM is best in class," writes CFRA Research analyst Kenneth Leon (Hold) "JPM benefits from economic growth, moderate loan balance growth for consumers and strength in capital markets. But we think other large banks have more upside potential on relative improving fundamentals."
A similar line of argument led Jefferies analyst Ken Usdin to downgrade JPM in February, to Hold from Buy.
"JPM is well-positioned for higher interest rates, which will lead to improved net interest income growth," Usdin writes, "but tough comparisons in many fee businesses will work against the grain, especially with the large increase in expenses planned in 2022 and potentially higher beyond."
Wherever the stock goes from here, it's worth noting that JPM has been one of the 30 best stocks of the past 30 years.
21. Johnson & Johnson
- Market value: $473.1 billion
- Dividend yield: 2.4%
- Analysts' consensus recommendation: 2.32 (Buy)
The big news with healthcare-sector giant Johnson & Johnson (JNJ (opens in new tab), $179.90) these days is its plan to spin off its consumer health business – the one that makes Tylenol, Band-Aid and Listerine – from its pharmaceutical and medical devices segments.
The move is meant to liberate the company's faster-growth, higher margin operations from the drag of slower-growth, less profitable endeavors – and analysts, for the most part, like it.
That said, the Street's consensus Buy recommendation does include a number of dissenters. Six analysts rate JNJ at Strong Buy, two say Buy, 10 have it at Hold and one calls it a Sell.
Among those sitting on the sidelines is BofA Securities analyst Geoff Meacham, who initiated coverage of JNJ in March at Neutral (the equivalent of Hold). Although the short-term backdrop looks "good," Meacham says "higher long-term uncertainty" prevents him from being more constructive on shares.
"We like J&J's near-term growth prospects, driven by continued pharma strength, as well as its 'safe haven' status in a challenging macro/geopolitical environment," Meacham writes. "That said, as the 'return to normal' trade plays out with diminishing COVID-19 headwinds and a growing risk appetite heading into the elections this fall, JNJ shares are likely to be a source of funds."
Bulls, meanwhile, point to the Dow stock’s defensive characteristics, including its almost incomparable record of dividend growth. This member of the S&P 500 Dividend Aristocrats has increased its payout annually for 60 years.
- Market value: $116.1 billion
- Dividend yield: 2.1%
- Analysts' consensus recommendation: 2.30 (Buy)
Shares in Caterpillar (CAT (opens in new tab), $216.70) are beating the broader market by a wide margin so far this year, and the Street's collective wisdom forecasts more outperformance ahead.
The world's largest manufacturer of heavy construction and mining equipment has heavy exposure to energy and other commodities. That makes it a great way to play rapidly rising prices around the globe, bulls say.
"CAT has historically been a strong hedge to commodity and general inflation," says Jefferies analyst Stephen Volkmann, who upgraded CAT to Buy from Hold in early March. "We believe the Russia/Ukraine crisis has fundamentally altered global commodity markets and is likely to drive a decade of reinvestment, similar to what the world experienced in the 1970s."
UBS Global Research analyst Steven Fisher (Buy) concurs with that investment thesis, adding he expects a "strong acceleration in margins in late 2022 and 2023 as steel and other input costs normalize vs. 2021 highs."
Jefferies and UBS have plenty of company in the bull camp; 11 analysts rate CAT at Strong Buy and four say Buy. Of the remaining analysts, 12 call shares a Hold, one says Sell and two say Strong Sell. That works out to a consensus recommendation of Buy with good if not great conviction.
Long-term income investors should know that CAT sports a reliable and rising dividend. This member of the S&P 500 Dividend Aristocrats has lifted its payout for 27 consecutive years and counting.
19. Cisco Systems
- Market value: $215.3 billion
- Dividend yield: 2.9%
- Analysts' consensus recommendation: 2.28 (Buy)
The information technology sector is trailing the broader market by a wide margin so far in 2022, and Cisco Systems (CSCO (opens in new tab), $51.82) stock, off nearly 20% year-to-date, has been no exception.
The Street's consensus view, however, suggests CSCO's selloff is overdone.
Analysts remain mostly bullish on the networking, cloud and cybersecurity giant – which regularly ranks among hedge funds' top blue-chip stocks to buy – thanks to a long and painful transition finally bearing fruit. Cisco has been moving away from being overly dependent on hardware such as internet routers and switches to more profitable software subscriptions and cloud-based services.
"Cisco remains the dominant networking vendor with strong underlying fundamentals," says Oppenheimer analyst Ittai Kidron (Outperform). "We're positive on opportunities in software-as-a-service/Cloud driving more recurring revenue. Given share repurchases helping to support the shares, we see opportunity to own Cisco."
CFRA Research likewise likes the Dow stock’s commitment to returning cash to shareholders. Analyst Keith Snyder cites the company's February dividend hike and $15 billion increase to its stock repurchase program among reasons to buy CSCO shares.
Indeed, Cisco sports a reliable and rising dividend, having increased its payout annually for 13 years. The board declared the most recent hike in February – a 3% increase in the quarterly payout to 38 cents per share.
Of the 29 analysts issuing opinions on CSCO tracked by S&P Global Market Intelligence, eight call it a Strong Buy, five say Buy and 16 rate it at Hold.
18. American Express
- Market value: $132.9 billion
- Dividend yield: 1.2%
- Analysts' consensus recommendation: 2.28 (Buy)
The Street has become significantly more bullish on American Express (AXP (opens in new tab), $175.54) over the past several months, helped by the easing of the global pandemic and rising consumer prices.
COVID-19 depressed transaction volumes across AXP's industry, notably in travel, leisure and cross-border spending. But American Express is now enjoying some relief from those trends.
Meanwhile, inflation actually helps AmEx. The firm takes a cut of every transaction via merchant fees. When consumers rack up larger bills, AXP's piece of that pie grows accordingly.
Indeed, rising inflation forms part of Wells Fargo's bullish stance on the stock – even as macroeconomic risks persist.
"AXP remains our Top Pick for 2022," says Wells Fargo analyst Donald Fandetti, who rates shares at Overweight (the equivalent of Buy), "but they are not fully immune to consumer credit fears and financial stock sentiment around the yield curve."
At William Blair equity research, analyst Robert Napoli (Outperform) praises AXP's "substantial network expansion," and its "focus on the premium consumer and younger cohorts," among other factors.
"American Express deserves a premium to the S&P 500 given its consistently higher historical and projected revenue and earnings growth rates," Napoli writes.
Let's also not forget that AmEx is one of Warren Buffett's all-time favorite stocks. The Berkshire Hathaway (BRK.B (opens in new tab)) CEO first bought shares in 1963 and remains AXP's largest stockholder by far today.
Seven analysts rate this Dow stock at Strong Buy, five say Buy, 12 have it at Hold and one calls it a Sell.
- Market value: $130.9 billion
- Dividend yield: 2.1%
- Analysts' consensus recommendation: 2.22 (Buy)
Honeywell (HON (opens in new tab), $190.99) has underperformed the broader market by so much, for so long, that it presents an exceptional opportunity to get one of the higher-quality Dow Jones stocks at a great price, bulls say.
Shares in the industrial stock are lagging the S&P 500 not only for the year-to-date, but for the past one, three and five years, as well. And although HON has picked up since the market's mid-March pivot, it remains not far off its 52-week low.
"This is rare," writes Argus Research analyst John Eade (Buy), arguing that HON's price doesn't square with its buy-and-hold market-beating potential.
"Honeywell is a leading blue-chip industrial company that is poised to generate low double-digit earnings growth over the long term," Eade says. "Honeywell will continue to benefit from its diverse product lines, as well as from its leading presence in the commercial aerospace and commercial construction markets."
True, the pandemic upended Honeywell's record of growth in 2020. However, the company is recovering, even as a "slowdown in defense spending and higher supply-chain costs have recently affected results," Eade adds.
Bulls additionally point to Honeywell's dividend and its ample yield in a low rate environment. Even better, HON has hiked its payout for 13 consecutive years.
Nine analysts rate Honeywell's stock at Strong Buy, five say Buy, 12 have it at Hold and one says Strong Sell. That works out to a consensus recommendation of Buy, with solid if not stellar conviction.
16. Procter & Gamble
- Market value: $381.2 billion
- Dividend yield: 2.2%
- Analysts' consensus recommendation: 2.17 (Buy)
The Street has become incrementally more bullish on Procter & Gamble (PG (opens in new tab), $159.01) in 2022, which certainly makes sense. Consumer staples stocks tend to hold up well when inflation is on the rise, and P&G in particular is as defensive a dividend stalwart as they come.
Nine analysts rate shares at Strong Buy, four say Buy, 10 have it at Hold and one says Strong Sell, per S&P Global Market Intelligence.
Raymond James, for one, counts itself among the bulls. Analyst Oliva Tong initiated coverage of PG at Outperform in early April, citing its defensive characteristics, among other factors.
"Strategy and portfolio changes in the last several years have clearly paid off, driving improved top- and bottom-line growth,'' Tong writes. "PG's improved ability to navigate volatility, cushion itself against costs with its own initiatives and focus on innovation position it well to sustain its momentum."
That said, even bullish analysts are anxious to see how P&G fares in a world of intense economic and geopolitical stress.
"We view PG's quarter as increasingly important against a market backdrop debating U.S. recession, the immediate and secondary impacts of Russia/Ukraine, as well as slowing and challenging growth in China," writes Deutsche Bank analyst Steve Powers (Buy).
One thing about this Dow stock that's never in doubt is its commitment to returning cash to shareholders. This member of the S&P 500 Dividend Aristocrats has paid a dividend since 1890, and has raised its payout for 66 years in a row.
15. Goldman Sachs
- Market value: $108.1 billion
- Dividend yield: 2.5%
- Analysts' consensus recommendation: 2.11 (Buy)
Mergers and acquisitions, debt underwriting, initial public offerings (IPOs) and other staple investment banking activities are forecast to have slumped across the industry in Q1, hurt by "geopolitical risks from Russia's invasion of Ukraine," notes CFRA Research analyst Kenneth Leon (Buy).
But happily for Goldman Sachs, the outlook isn't entirely one of doom and gloom.
"Fixed income, currencies and commodities are likely to see elevated trading given wider spreads and higher risks to geopolitical and macroeconomic factors," Leon adds.
Most importantly, Leon and other Goldman bulls say dour market sentiment has left GS attractively undervalued. And going by the yield on Goldman's dividend, shares do look heavily discounted.
Consider that at one point in early April, Goldman's yield topped 2.3%. (Stock prices and yields move in opposite directions.) To put that in context, GS's five-year average dividend yield stands at 1.6%. The five-year median yield is even lower.
Eight analysts rate GS at Strong Buy and eight say Buy, while 11 call it a Hold. The Street's average price target of $425.38 gives GS stock implied upside of 30% over the next 12 months.
- Market value: $332.1 billion
- Dividend yield: 3.4%
- Analysts' consensus recommendation: 2.11 (Buy)
Analysts have long been bullish on Chevron (CVX (opens in new tab), $169.01), and now surging oil prices only reinforce their case for shares to generate even more market-beating returns.
Of the 28 analysts tracking the Dow's lone energy-sector stock, 10 call it a Strong Buy, seven say Buy, nine have it at Hold and two rate it at Sell.
"With the strongest financial base of the majors, coupled with an attractive relative asset portfolio, Chevron offers the most straightforwardly positive risk/reward," writes Raymond James analyst Justin Jenkins (Outperform).
Bulls also praise CVX's ability to benefit from rising energy prices while carrying less risk from any decline in prices for gasoline and other refined petroleum products.
"Among its integrated peers, Chevron has above-average leverage to crude oil prices and the lowest exposure to the downstream," writes UBS Global Research analyst Lloyd Byrne (Buy).
Rising oil prices also help CVX return more cash to shareholders, the analyst says, noting the company recently essentially doubled its annual buyback target to $5 billion to $10 billion, up from $3 billion from $5 billion.
"At $75 per barrel for Brent crude oil, CVX believes it can buy back approximately 25% of shares outstanding over 5 years," Byrne adds. "At $50 per barrel Brent, the current buyback can be maintained and the dividend still grown."
On that last point, it's true that few companies have been as committed to dividend growth as Chevron has. This member of the S&P 500 Dividend Aristocrats has increased its payout for 35 consecutive years.
- Market value: $216.5 billion
- Dividend yield: 3.2%
- Analysts' consensus recommendation: 2.04 (Buy)
The bull case on Merck (MRK (opens in new tab), $85.63) used to be that shares had underperformed the market by such a wide margin for so long that they were too cheap to ignore.
Now, the pharma giant's stock is clobbering the S&P 500 for the year-to-date – and the Street says it has much more room to run.
Of the 26 analysts issuing opinions on MRK tracked by S&P Global Market Intelligence, 10 rate shares at Strong Buy, five say Buy and 11 have them at Hold.
Pros sitting on the sidelines point to Merck's heavy reliance on blockbuster cancer drug Keytruda, which will lose patent exclusivity in 2028.
Bulls counter that Keytruda's loss of exclusivity is adequately reflected in the share price. They further argue that the market insufficiently values recent and potential acquisitions, as well as Merck's drug pipeline, which includes a new coronavirus treatment.
Although Keytruda is indeed "a key growth driver," Argus Research analyst David Toung (Buy) notes that Merck's "COVID-19 antiviral Molnupirarvir will make a substantial contribution in 2022."
The analyst also applauds Merck's $11.5 billion acquisition last year of Acceleron Pharma, which strengthens the firm's cardiovascular portfolio. And MRK is likely to pursue additional pipeline-boosting deals, Toung adds.
True, bears will note that Warren Buffett completely sold out of Berkshire Hathaway's position in Merck in Q3.
Bulls, on the other hand, can tout the fact that Merck routinely makes the list of hedge funds' top 25 blue-chip stocks.
- Market value: $104.1 billion
- Dividend yield: N/A
- Analysts' consensus recommendation: 1.91 (Buy)
Boeing (BA (opens in new tab), $176.28) can't seem to catch a break. Over the past few years the company has been hammered by the grounding of 737 Max jets, production issues with the 787 Dreamliner, the pandemic-caused collapse in global air travel and, most recently, the crash of a Boeing commercial airliner in China.
But the Street tilts toward bullishness on the name, figuring the worst run of bad news – and share-price underperformance – is behind the aerospace giant.
Twelve analysts rate BA at Strong Buy, five say Buy, four have it at Hold and two call it a Strong Sell.
BofA Securities, for one, counts itself in the Hold camp. Analyst Ronald J. Epstein rates Boeing stock at Neutral, citing the company's litany of challenges ahead.
"In the next five years, Boeing faces headwinds," Epstein writes. "Boeing needs to overcome the market share loss in the large narrowbody market (737 MAX 9/10), as well as managing production issues on the 787 and the 777X."
On the other side of the trade stands CFRA Research analyst Colin Scarola (Strong Buy), who says the market is failing to price in an improving macro backdrop and better-than-expected free cash flow generation, among other factors.
"Our forecast is for total revenue to recover to 1% above 2018 level in 2024, by which time global aircraft demand will have fully recovered," Scarola writes.
The analyst adds that BA posted "surprising positive free cash flow" in the fourth quarter and paid down $2.6 billion in debt "despite still depressed aircraft delivery rates."
- Market value: $279.9 billion
- Dividend yield: 2.7%
- Analysts' consensus recommendation: 1.88 (Buy)
The Street is collectively bullish on one of Warren Buffett's all-time favorite stocks. Berkshire Hathaway first bought Coca-Cola (KO (opens in new tab), $64.56) in 1988, and KO remains the holding company's fourth largest position today.
Analysts are fans of the soft drinks maker too. Not only is KO one of the best dividend stocks in the Dow Jones Industrial Average for total return potential, it's a dividend growth investor's dream come true. This S&P 500 Dividend Aristocrat has increased its payout for 60 consecutive years.
Coca-Cola was hit hard by the pandemic, which shut down restaurants, bars, live events and myriad other venues serving its vast portfolio of sodas, juices, teas, sports and energy drinks. Those sales are now coming back.
"While the company has seen significant disruption from COVID-19, we believe that earnings probably bottomed in the second quarter of 2020," writes Argus Research analyst Chris Graja (Buy). "Revenue should continue to improve as economies reopen and consumers return to restaurants and, eventually, to amusement parks and sporting events."
The resurrection in revenue prompted CFRA Research analyst Garrett Nelson to upgrade KO to Buy from Hold in January, citing Coke's "fundamentals and strong underlying momentum from the rebound in on-premise sales and robust pricing environment."
The Street gives shares a consensus recommendation of Buy, with high conviction. Twelve analysts rate KO at Strong Buy and six say Buy, while just seven call it a Hold and only one says Sell, per S&P Global Market Intelligence.
10. Walt Disney
- Market value: $238.2 billion
- Dividend yield: N/A*
- Analysts' consensus recommendation: 1.79 (Buy)
As a sprawling media and entertainment conglomerate, analysts see Walt Disney (DIS (opens in new tab), $130.84) as an obvious way to play the post-COVID economy.
True, Disney stock is trailing the broader market by a wide margin so far in 2022. But analysts say it's only a matter of time before a sort of "recovery trade 2.0" reinflates DIS shares.
Indeed, they forecast the company to generate average annual EPS growth of more than 46% over the next three to five years.
Remember: The coronavirus took a huge bite out of some of the company's most important divisions (specifically, its theme parks and studios). Those businesses are now coming back.
Wells Fargo Securities analyst Steven Cahall rates DIS at Overweight, citing, in part, a recovery in traffic to the company's amusement parks. Deutsche Bank analyst Bryan Kraft likewise cites amusement park attendance in making his Buy call on shares.
The analysts have plenty of company, as the Street's consensus recommendation stands at Buy, with high conviction. Fourteen analysts rate DIS at Strong Buy, seven say Buy and eight have it at Hold. Their average target price of $186.56 gives DIS stock implied upside of 40% in the next 12 months or so.
It's also worth mentioning that DIS ranks as one of hedge funds' 25 top blue-chip stocks to buy now, as well as one of the 30 best stocks of the past 30 years.
* Disney suspended its dividend in May 2020 in response to the COVID-19 crisis.
9. Home Depot
- Market value: $316.5 billion
- Dividend yield: 2.5%
- Analysts' consensus recommendation: 1.79 (Buy)
Home Depot (HD (opens in new tab), $306.29) stock has lost a quarter of its value and is lagging the broader market by a wide margin for the year-to-date, hurt by rising interest rates and inflationary pressures, among other issues.
The Street, however, says the drawdown affords investors an opportunity to get a great stock at a good price.
Home Depot has long been one of the Street's favorite ways to play the housing market. HD also proved to be a profitable way to play COVID-19. And although shares are stumbling of late, analysts believe shifts in consumer behavior unleashed by the pandemic will help this Dow stock to return to its market-beating ways.
Although input cost pressures, rising rates and difficult comparisons to past pandemic-inflated results have some analysts sitting on the sidelines, the Street's consensus recommendation comes to Buy, with high conviction. Seventeen analysts rate HD at Strong Buy, seven say Buy, eight have it at Hold and one calls it a Sell.
BofA Securities analyst Elizabeth Suzuki is in the Buy camp on HD, citing an attractive valuation and the company's "resilience," as well as "likely market share gains and consistent execution."
HD stock does indeed look compellingly priced based on relative valuation. Shares trade at 19 times analysts' next-12-months EPS estimate. That represents a discount of 11% to the stock's own five-year average, per Refinitiv Stock Reports Plus.
Meanwhile, analysts' average target price of $378.17 gives HD stock implied upside of 23% in the next year or so.
- Market value: $184.3 billion
- Dividend yield: 2.2%
- Analysts' consensus recommendation: 1.78 (Buy)
McDonald's (MCD (opens in new tab), $249.17) has always done well by income investors. The fast food chain also happens to be one of the best Dow dividend stocks to buy now. And it's a member of the S&P 500 Dividend Aristocrats, having raised its payout annually for 45 years.
But analysts like MCD's potential for share-price appreciation in the shorter term, too. That's why the Street's consensus recommendation stands at Buy, with high conviction.
McDonald’s stock stumbled earlier this year when the company halted operations in Russia in response to that country's invasion of Ukraine. But bulls believe any related pullback is a chance to buy MCD on weakness.
"In 2021, the Russia/Ukraine market represented less than 3% of MCD's consolidated operating profits," says Oppenheimer analyst Brian Bittner (Outperform). "Our work suggests MCD's above-average exposure to Russia/Ukraine is now fully priced in."
Bulls also praise the way MCD responded to the worst of the pandemic by greatly improving efficiency. That's a change that should deliver long-tail returns, they say.
"While drive-thrus have provided about 70% of revenue for decades, simplified menus during the pandemic have enabled MCD to increase the number of orders it can process," says Argus Research analyst John Staszak (Buy).
Eighteen analysts rate 18 MCD stock at Strong Buy, nine say Buy and 10 have it at Hold, per S&P Global Market Intelligence.
Meanwhile, their 12-month average price target of $280.60 gives McDoanld’s implied upside of about 13%. Add in the dividend yield, and the Street sees MCD delivering market-beating returns in the year ahead.
- Market value: $421.7 billion
- Dividend yield: 1.5%
- Analysts' consensus recommendation: 1.74 (Buy)
If there's one thing analysts and investors alike have learned about Walmart (WMT (opens in new tab), $153.23), it's that you don't bet against the world's biggest retailer – and largest company by revenue – for too long.
Heck, the discount retail chain is among the top 10 best global stocks of the past 30 years.
Shares are beating the broader market by a wide margin so far in 2022, helped by the company's commitment to low prices.
CFRA Research analyst Arun Sundaram (Buy) expects WMT's momentum to continue "as consumers likely become increasingly price conscious, with inflation being at a 40-year high." The analyst notes that Walmart's average price gap relative to its competition continues to widen versus pre-pandemic levels.
"We also believe investors are underappreciating WMT's evolving business model, including omnichannel transformation and its high-margin alternative profit streams (e.g., advertising is now over $2 billion in annual revenues)," Sundaram adds.
Once an online also-ran, Walmart's "omnichannel transformation" has made it the nation's second largest e-commerce retailer after Amazon.com (AMZN (opens in new tab)).
Another argument for Walmart is its ability to weather economic downturn, should that come to pass. Wells Fargo Securities, for example, includes WMT stock on its list of "best recession plays."
Walmart boasts one of the strongest Buy ratings among the 30 Dow Jones stocks. Of the 38 analysts issuing opinions on WMT tracked by S&P Global Market Intelligence, 20 rate it at Strong Buy, eight call it a Buy, and 10 have it at Hold. They forecast the company to generate average annual EPS growth of 8.3% over the next three to five years.
6. UnitedHealth Group
- Market value: $502.2 billion
- Dividend yield: 1.1%
- Analysts' consensus recommendation: 1.67 (Buy)
With a market value of more than $500 billion and a 2022 revenue estimate of $319.5 billion, UnitedHealth Group (UNH (opens in new tab), $533.71) is the largest publicly traded health insurer by a wide margin.
Analysts praise the company on a number of fronts, and frequently single out contributions from Optum, its pharmacy benefits manager segment.
"We remain impressed by the year-to-year consistency UNH shows as it continues to exceed expectations by navigating the industry's many pitfalls," writes Oppenheimer analyst Michael Wiederhorn (Outperform). "We continue to believe UNH remains the bellwether in the healthcare services space, and we remain buyers of UNH."
Oppenheimer has plenty of company on the Street, which gives UNH a consensus recommendation of Buy, with high conviction. Of the 24 analysts issuing opinions on the stock, 14 call it a Strong Buy, six have it at Buy, three say Hold and one rates UNH at Sell, per S&P Global Market Intelligence.
UNH's robust long-term growth forecast is another point in the bulls' favor. The Street forecasts the health insurer to generate average annual EPS growth of 13.9% over the next three to five years.
Although shares trade at a seemingly pricey at 24.8 times the Street's 2022 EPS estimate, Argus Research's David Toung (Buy) says UNH's "solid growth drivers" support its premium valuation.
"UnitedHealth's combination of top-line growth and margin expansion is also driving an industry-leading return on investment," Toung adds.
- Market value: $2.7 trillion
- Dividend yield: 0.5%
- Analysts' consensus recommendation: 1.65 (Buy)
Apple (AAPL (opens in new tab), $167.66), the world's largest publicly traded company, is beloved by analysts, but no less a luminary than Warren Buffett is truly head over heels for the stock.
That's because Apple isn't just a purveyor of gadgets; it sells an entire ecosystem of personal consumer electronics and related services. And it's a sticky ecosystem, at that.
Buffett has called the iPhone maker Berkshire Hathaway's "third business," noting Apple fans' fantastic brand loyalty as one reason for being all-in on the stock. (Apple accounts for more than 46% of the value of Berkshire's equity portfolio.)
And with Apple reigning as No. 1 among the best stocks of the past 30 years, who's going to argue with Buffett's ardor for the stock?
Not the Street, that's for sure.
Twenty-seven analysts 27 call AAPL a Strong Buy, seven say Buy, seven have it at Hold, one says Sell and one says Strong Sell.
Apple might be best known for its gadgets and services, but investors shouldn't look past its emerging streaming media business, says Wedbush Securities, which has AAPL on its Best Ideas List.
After all, the company just made history as the first streamer to win an Academy Award for Best Picture with the film Coda, says analyst Daniel Ives (Outperform).
"We view this Oscar win as a game changer for Apple on its content efforts," Ives writes. "It legitimizes Apple TV+ as a major streaming platform with much more success ahead and the Street is now starting to take more notice."
- Market value: $196.8 billion
- Dividend yield: 0.9%
- Analysts' consensus recommendation: 1.59 (Buy)
Inflationary pressures and lockdowns in the massive consumer market of China haven't shaken the Street's faith in Nike (NKE (opens in new tab), $125.04) stock.
Indeed, with 20 analysts rating shares at Strong Buy, eight saying Buy and six calling them a Hold, Nike comes close to receiving a consensus recommendation of Strong Buy.
Partly that's a function of Nike's unique brand status in the footwear and apparel industry. Baird equity research analyst Jonathan Komp rates NKE at Outperform, noting its ability to thrive in tough times.
"For investors concerned about potential recession scenarios (not our base case), we again highlight our view that brand possessing a combination of strong fundamentals, relatively high operating margin (less levered to sales downside), pricing power and strong balance sheets would hold up the best, including NKE," Komp writes.
Although macroeconomic headwinds could make for a bumpy few quarters, bulls say few stocks in Nike's subsector enjoy such strong buy-and-hold bona fides.
"Over the long term, we expect Nike to continue to dominate the athletic apparel and footwear markets, and note that it has a particularly strong presence in high-end footwear thanks to its marketing strength," says Argus Research analyst John Staszak (Buy). "We expect the company to build on its dominant position through its globally recognized brand, innovative products, economies of scale and rapid growth in emerging markets."
With an average target price of $167.22, the Street gives NKE stock implied upside of about 34% in the next 12 months or so.
- Market value: $443.5 billion
- Dividend yield: 0.7%
- Analysts' consensus recommendation: 1.51 (Buy)
Analysts, hedge funds, mutual fund managers and even Warren Buffett love Visa (V (opens in new tab), $211.40). That's because they believe the world's largest payments network stands to reap outsized rewards from the massive and secular growth in cashless transactions.
The firm's pedigree no doubt has its appeal, as well. Visa is one of the 30 best stocks of the past 30 years. It also doesn't hurt that even after reducing its stake by 13% in the fourth quarter, Warren Buffett's Berkshire Hathaway still owns 8.3 million shares in Visa, or 0.4% of its shares outstanding.
Little wonder then that Visa regularly makes the list of hedge funds' 25 top blue-chip stocks. It should also come as no surprise that shares garner a consensus recommendation just a whisper shy of Strong Buy.
"We are highly attracted to Visa's powerful brand, vast global acceptance network and strong business model," writes Oppenheimer analyst Dominick Gabriele (Outperform). "The company is well positioned to benefit from the long-term secular shift from paper currency (cash/check) to plastic (electronic payments), consumer spending growth and increased globalization."
Oppenheimer, which calls Visa a "top pick," has plenty of company. Twenty-one analysts call V a Strong Buy, 10 say Buy and four have it a Hold.
The Street forecasts Visa to generate average annual EPS growth of more than 18% over the next three to five years. True, shares might appear pricey given they trade at 30.3 times analysts' 2022 EPS estimate, but that's actually slightly below their own five-year average.
- Market value: $192.9 billion
- Dividend yield: N/A
- Analysts' consensus recommendation: 1.50 (Strong Buy)
Salesforce (CRM (opens in new tab), $194.81) stock has lost nearly a quarter of its value so far in 2022, but the Street says that just leaves it priced for market-beating performance ahead.
Indeed, the software-as-a-service (SaaS) juggernaut's stock is one of only two Dow Jones components to receive a consensus recommendation of Strong Buy. Thirty-two analysts call CRM a Strong Buy, 11 say Buy and seven have it at Hold.
That overwhelming bullishness is reflected in the Street's average target price. At $298.29, analysts give CRM implied upside of more than 50% in the next 12 months or so.
Salesforce.com provides customer relationship management software to enterprise customers. It was essentially doing cloud-based services before they were cool. Bulls say that early mover advantage gives CRM an edge when it comes to capturing accelerating corporate spending on cloud-based services and products.
"Salesforce's customer diversification, product portfolio breadth and SaaS model is continuing to gain significant momentum in the field as the digital transformation spending cycle kicks into its next gear of growth," writes Wedbush analyst Daniel Ives (Outperform). "Salesforce is in the catbird's seat to continue capitalizing on the large demand seen throughout the industry."
The compelling bull case for shares – and CRM's massive market value and liquidity – makes them a frictionless fit for institutional investors buying and selling large positions. That explains in part why Salesforce.com routinely ranks among hedge funds' 25 top blue-chip stocks to buy.
- Market value: $2.1 trillion
- Dividend yield: 0.9%
- Analysts' consensus recommendation: 1.32 (Strong Buy)
Microsoft (MSFT (opens in new tab), $282.06) – second only to Apple among the best stocks of the past 30 years – is the Street's top-rated Dow component.
Of the 47 analysts issuing opinions on the software giant, 33 rate it at Strong Buy, 13 say Buy and one has it at Hold. That works out to a consensus recommendation of Strong Buy, with pretty high conviction to boot.
What gives MSFT the edge over every other Dow Jones stock in terms of analysts' favor is its overwhelming success in cloud services. Products such as Azure and Office 365 have proven to be huge hits with enterprise customers. And those customers are just getting started.
Analysts say corporations' ongoing digital transformation to cloud services represents a total addressable market of $1 trillion – and it's a market MSFT is especially well positioned to exploit.
"Microsoft remains our favorite large cap-cloud play as the Street further appreciates the cloud transformation story," writes Wedbush analyst Daniel Ives (Outperform). "With workforces expected to have a heavy remote focus, we believe the cloud shift is just beginning to take its next stage of growth globally. This disproportionally benefits Microsoft."
Wedbush has MSFT on its Best Ideas List and calls it one of its favorite names in tech for 2022.
The putative smart money feels the same way. Quarter after quarter, Microsoft ranks at No. 1 on the list of hedge funds' top 25 blue-chip stocks to buy.
Dan Burrows is Kiplinger's senior investing writer, having joined the august publication full time in 2016.
A long-time financial journalist, Dan is a veteran of SmartMoney, MarketWatch, CBS MoneyWatch, InvestorPlace and DailyFinance. He has written for The Wall Street Journal, Bloomberg, Consumer Reports, Senior Executive and Boston magazine, and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among other publications. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange and hosted a weekly video segment on equities.
Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.
In his current role at Kiplinger, Dan writes about equities, fixed income, currencies, commodities, funds, macroeconomics and more.
Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.
Disclosure: Dan does not trade stocks or other securities. Rather, he dollar-cost averages into cheap funds and index funds and holds them forever in tax-advantaged accounts.
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