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All Contents © 2020The Kiplinger Washington Editors
By Dan Burrows, Contributing Writer
| June 3, 2020
The Dow Jones Industrial Average – that group of 30 blue-chip behemoths with long track records of outperformance – is trailing the other major indexes by a wide margin this year.
But the Dow's 30 stocks are starting to catch up.
The DJIA is down nearly 10% year-to-date. That compares unfavorably with the S&P 500's drop of less than 5%, to say nothing of the Nasdaq Composite's rise of more than 7%. Since the market's bottom in March, however, it's essentially a three-way tie. The Dow, S&P 500 and Nasdaq are all up about 40%.
If you want to ride the coattails of the Dow's accelerating revival, just remember that not all Dow stocks are created equal. Each index component has a solid pedigree. However, their short- to intermediate-term prospects diverge widely.
If you want to pick and choose among the bluest of blue chips, you can look at this full list of 30 Dow stocks that we've sorted by analysts' average recommendation. Here's how it works: S&P Global Market Intelligence 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 a Hold recommendation. Any score lower than 2.5 means that analysts, on average, rate the stock as being Buy-worthy. The closer a score gets to 1.0, the better.
Read on as we show you how Wall Street's analysts rate all 30 Dow stocks right now – and what they have to say about them.
Share prices, dividend yields, price targets, analysts’ ratings and other data are courtesy of S&P Capital IQ as of June 2, unless otherwise noted. Stocks are listed by analysts’ average recommendation.
Market value: $38.2 billion
Dividend yield: 4.2%
Analysts' average recommendation: 3.04 (Hold)
Walgreens Boots Alliance's (WBA, $43.55) sluggish revenue growth has analysts sitting firmly on the fence.
The largest U.S. pharmacy chain is forecast to post a sales gain of just 1.6% this year, according to data from S&P Global Market Intelligence. Revenue next year is projected to rise only 3.9%. And fiscal 2020 earnings are expected to fall to $5.48 per share from $5.99 last year. This, despite the fact that the pharmacy chain was one of the protected "essential" retailers allowed to remain open during pandemic-related stay-at-home restrictions.
COVID-19 has benefitted a number of retailers in the consumer staples industry, but not WBA. Cowen analyst Charles Ryhee rates the stock at Market Perform (the equivalent of Hold), saying that although WBA looks oversold in the near-term, he remains unconvinced by management's long-term strategy.
Currently, 23 analysts that are tracked by S&P Global Market Intelligence cover WBA shares. Only one calls it a Buy, versus 20 Holds and two Sells. The result is the worst aggregate rating among the 30 Dow stocks, although even then, it's not a recommendation to jump ship.
Market value: $90.7 billion
Dividend yield: 3.7%
Analysts' average recommendation: 3.00 (Hold)
Industrial conglomerate 3M (MMM, $157.64), which makes everything from adhesives to electronic touch displays, hasn't kept up its end of the bargain when it comes to being a defensive stock. Shares are off roughly 11% year-to-date versus a decline of less than 5% for the S&P 500.
But 3M's troubles stretch farther back than 2020. MMM shares declined 20% between April 2019 and the end of the year, struggling in part because of slower growth in China. And that was before the spread of coronavirus led to a Chinese lockdown, followed by damage to the rest of the global economy.
True, 3M continues to ramp up production of N95 respirators, but those aren't the kind of high-margin products that move the earnings needle.
"We are mindful of the fact that 3M is one of the highest-quality multi-industry companies," says RBC Capital Markets, which rates shares at Hold. "That said, we believe that the company's historical reputation for being a defensive 'safe haven' has been eroded by its now-apparent sensitivity to demand softness."
Happily for income investors, MMM halted buybacks and cut capital expenditures to prioritize the dividend. The company has hiked its payout annually since 1959, making it one of several Dow stocks that are members of the Dividend Aristocrats.
Market value: $200.1 billion
Dividend yield: 7.4%
Analysts' average recommendation: 2.92 (Hold)
Analysts are mostly cautious about the prospects for shares in Exxon Mobil (XOM, $47.31) over the next year or so, as the company's bottom line continues to bottom out. The largest U.S. oil producer by volume is forecast to post a net loss of 37 cents per share this year.
A plunge in energy prices has the industry struggling with weaker margins in oil, natural gas, chemicals and refining. However, analysts do like how Exxon Mobil is positioned for a long slump or imminent recovery.
"XOM retains significant flexibility to reduce spending; but in a recovery, it will have the growth capacity to support rapid debt reduction not available to many of its peers," says Bank of America Merrill Lynch, which rates the stock at Buy.
Meanwhile, CEO Darren Woods has said that Exxon's dividend, which has grown for 37 consecutive years, is a high priority … for now. "If we haven't seen a recovery next year, you know it will be a different environment that we're in," he says.
Three analysts polled by S&P Global Market Intelligence rate XOM stock at Strong Buy, zero call it a Buy, 17 say Hold and four have it at Sell.
Market value: $28.1 billion
Dividend yield: 3.1%
Analysts' average recommendation: 2.90 (Hold)
He's not a Wall Street analyst, but one of the most important investors in the world recently gave Travelers (TRV, $111.00) a Sell call.
Warren Buffett, CEO and chairman of Berkshire Hathaway (BRK.B), dumped his company's entire stake in the Dow component during 2020's first quarter. If it's any consolation, that position was a tiny one that many already thought was on its way out.
Travelers and other insurance stocks have been clobbered by the coronavirus outbreak and little is lining up in their favor. Low interest rates, lower core margins and higher reinsurance pricing makes it tough to be excited about TRV anytime soon.
If there's a silver lining, it's that high unemployment means fewer claims for workers' compensation, notes Keefe, Bruyette & Woods, which rates TRV at Hold. Meanwhile, BofA's Joshua Shanker (Buy) tells clients that the firm is "emerging from an underwriting trough."
Four analysts call TRV a Strong Buy, one says Buy, 11 have it at Hold, three say Sell and two call it a Strong Sell. Their average target price of $116.94 implies that the stock has a modest 5% or so of upside over the next year.
Market value: $111.9 billion
Dividend yield: 5.2%
Analysts' average recommendation: 2.74 (Hold)
International Business Machines (IBM, $126.00) is another of the blue-chip Dow stocks getting lukewarm reviews from Wall Street.
The Street was optimistic about the incoming CEO – Arvind Krishna succeeded Ginni Rometty in early April – but that was before the global economy came to a standstill.
"We expect revenues to remain pressured during the COVID-19 pandemic given IBM's exposure to large enterprises including travel, hospitality, retail etc.," writes Citigroup, which rates the stock at Neutral (Hold).
Citi also expects to see a very slow demand recovery in 2021. And since IBM has to be careful with its cash, "the lack of IBM (stock buybacks) for the next two years no longer presents valuation support."
In good news for income investors, IBM in April announced its 25th consecutive year of dividend hikes. And at a yield of more than 5%, it's one of a handful of durable high-dividend stocks.
Two analysts give shares a Strong Buy rating and two say they're a Buy. The majority of 14 analysts call IBM a Hold, and one slaps a Sell recommendation on the stock.
Market value: $263.0 billion
Dividend yield: 2.1%
Analysts' average recommendation: 2.64 (Hold)
Intel (INTC, $62.12) is one of several Dow Jones stocks with a positive return in 2020 – a modest 2% – helped by demand for its chips created by people working from home.
That said, management pulled its second-half guidance because of uncertainty created by the coronavirus pandemic. Analysts note that sales could weaken throughout the year. Meanwhile, competition from the likes of Nvidia (NVDA) and Advanced Micro Devices (AMD) remains intense.
"Our concerns center around: 1) what the 2nd half might look like once COVID-19 related purchasing slows, and 2) our belief that AMD will likely take share through 2021 due to products that currently are comparable, if not superior to INTC parts," says Wedbush, which rates shares at Underperform (equivalent of Sell).
Analysts and investors alike are worried about lower gross profit margins and higher costs, too.
Market value: $66.7 billion
Dividend yield: 3.3%
Analysts' average recommendation: 2.62 (Hold)
Caterpillar (CAT, $123.32) is the world's biggest maker of construction and mining equipment. That makes it something of a bellwether for the health of the global economy. And with China gaining traction after ending its lockdown, there's some hope business will pick up.
CAT management notes that "all of our facilities are operating in China again and our suppliers are doing much better in China as well."
That's the good news. The bad news is the global economy has a long way to go. The industrial giant still must contend with weak demand for oil and gas and a slower construction environment.
Zacks Investment Research, which rates CAT at Strong Sell, says, "the U.S.-China trade war and waning global demand had already taken a toll on the U.S manufacturing sector, and the coronavirus pandemic has only aggravated the scenario."
Additionally, steel tariffs are raising input costs and hurting margins.
Some analysts see value in Caterpillar's stock at current levels. Six say shares are a Strong Buy and six call it a Buy, according to S&P Global Market Intelligence. Of the remaining analysts surveyed, 9 have CAT at Hold, two say Sell and three rate it a Strong Sell.
Market value: $30.1 billion
Dividend yield: 6.9%
Chemical giant Dow Inc. (DOW, $40.60) has surged 50% off the bear-market lows, but it has absorbed a slew of analyst downgrades over the past month or so.
Credit Suisse, which cut its view to Neutral from Buy, feels confident about Dow's dividend, but not much else. Coronavirus headwinds are going to impact earnings not just this year, but next year and in 2022 as well.
"Bottom line, we applaud DOW's focus on shareholder value and more prudent approach to cash deployment, but believe after an initial 'snap back' post COVID-19, demand will experience a prolonged recovery and both idled/new supply are there to accommodate."
UBS, HSBC, Citi and Merrill Lynch analysts also knocked Dow down a peg over the past 30 days or so.
The analyst consensus for earnings growth isn't pretty either, at just 0.44% annually over the next three to five years. Four analysts rate DOW stock at Strong Buy, one at Buy, 15 at Hold and one at Sell.
Market value: $233.4 billion
Dividend yield: 4.4%
Analysts' average recommendation: 2.48 (Buy)
Analysts have dipped into the Buy camp when it comes to Verizon (VZ, $56.40), the only telecommunications company among the 30 Dow stocks.
The lockdown and work-from-home environment have been good for communications companies. That has helped lift sentiment on a name that faces stiff competition.
"We think Verizon is well positioned in the context of today's socio-economic backdrop given that mobile communications and broadband are essential services for most consumers, and increasingly so, and thus should see durable performance," writes Deutsche Bank, which ranks the stock at Hold.
Further out, VZ is betting big on rolling out a high-speed 5G wireless network, a strategy that won't start to move the revenue needle until 2021.
The company also is taking a shot at red-hot Zoom Video Communications (ZM). It recently acquired video conferencing company BlueJeans for about $500 million.
Twenty of the Street's analysts give Verizon shares a Hold rating. Of the remaining analysts, six say VZ is a Strong Buy and three call it a Buy. Analysts forecast average annual earnings growth of just 2.9% over the next three to five years.
Market value: $301.4 billion
Dividend yield: 3.6%
Analysts' average recommendation: 2.46 (Buy)
JPMorgan Chase (JPM, $98.93) gets an average rating of Buy from Wall Street analysts, but it's hardly a slam-dunk call.
The nation's biggest bank by assets, which may have enjoyed a small lift from participating in the emergency SBA loan program, still has to contend with minuscule interest rates and rising loan-loss reserves, among other issues.
"Further, coronavirus-induced concerns will likely continue to hamper business activities," writes Zacks Investment Research, which rates shares at Hold. "Thus, loan growth will likely be muted in the near term. Challenges in expanding mortgage operations and significant dependence on capital market revenues will hurt fee income growth to an extent."
That uncertainty prompted Warren Buffett – who has several Dow stocks in the Berkshire portfolio – to cut his stake in the money-center bank by roughly 3%, or about 1.8 million shares, during the first quarter.
Five analysts call JPM a Strong Buy, six have it at Buy and 14 say Hold. One lone bear has it at Strong Sell.
Market value: $86.5 billion
Dividend yield: N/A
Analysts' average recommendation: 2.43 (Buy)
The seemingly endless saga of its grounded 737 Max jets hit Boeing (BA, $153.31) pretty hard. Then came the pandemic that pummeled global air traffic and even pushed some carriers into bankruptcy. At their 2020 lows, BA shares lost more than 60% of their value, and the aircraft maker also was forced to kill its dividend.
"We are still cautious on Boeing until we get better visibility on the pace of improvement in air travel and when airlines will start to order aircraft again," says Canaccord Genuity, which rates BA at Hold.
Some analysts are more bullish. RBC Capital has a Buy rating based in part on sentiment, figuring that investors will feel better about the stock when air traffic begins to pick up.
The result is an encouraging analyst consensus. Six analysts rate BA at Strong Buy, three at Buy and 13 at Hold. One solitary analyst says it's a Strong Sell. On the whole, they expect Boeing to grow profits by 13% annually over the next three to five years. And their average price target of $171.71 gives BA stock implied upside of about 12% in the next year or so.
Market value: $79.7 billion
Dividend yield: 1.7%
Analysts' average recommendation: 2.24 (Buy)
The Street's collective wisdom tips American Express (AXP, $99.07) into the Buy camp. Nine analysts rate AXP at Strong Buy, five say Buy, 14 call it a Hold and one says Sell.
One investor who has never wavered in his faith in the credit card company is Warren Buffett, who first bought shares in AmEx in 1963. And although he has sold stakes in 21 companies this year – including Mastercard (MA) and Visa (V) – he hasn't touched AXP.
The credit card company has been remarkably resilient during the downturn. "Credit quality looks fine … so far," notes Piper Sandler, which has AXP at Overweight (Buy). "April credit metrics were essentially in line with our expectations. They also matched performance in March. This might seem counter-intuitive with the economic dislocations of the last two months."
Despite its overall bullish view, Wall Street's average price target of $101.62 gives this Dow stock implied upside of less than 3% over the next year or so. Thus, investors should watch the analyst community closely to see if they continue to raise their price targets, or start downgrading AmEx shares on valuation concerns.
Market value: $198.0 billion
Analysts' average recommendation: 2.21 (Buy)
Cisco Systems (CSCO, $46.89) has handled the coronavirus pandemic better than the Street expected, notes William Blair equity research.
"Against a tumultuous backdrop that affected both demand and supply, Cisco posted better-than-feared third-quarter results, with the firm demonstrating the customer diversity and overall resilience of its business while seeing a boost in key product areas (mainly WebEx and security) from the global work-from-home rush," writes William Blair, which rates the technology conglomerate at Market Perform (Hold).
Although the ongoing pandemic makes it hard to value shares for the year ahead, nine call CSCO a Strong Buy and four say it's a Buy. The remaining 15 analysts rate the Dow Jones component a Hold.
Their average price target of $49.25 isn't terribly bullish, implying upside of about 5% over the coming year. Profit growth projections are so-so, too, at 6.1% annually over the next three to five years.
Market value: $200.9 billion
Analysts' average recommendation: 2.18 (Buy)
Pfizer (PFE, $36.16) remains among the Dow stocks that have earned an average Buy recommendation on Wall Street, even after reporting disappointing news about a breast cancer treatment.
The pharmaceutical giant in late May halted its Phase 3 PALLAS trial for its Ibrance treatment, as it was unlikely to meet the endpoint of improving survival rates.
Cowen reiterated its Outperform (Buy) rating on shares but added that the move "is a significant disappointment and opens the door for competitors who have different … agents in similar trials."
Citigroup, which has the stock at Neutral, thinks this could be something of a blessing in disguise. "We see the event as an important clearing event to de-risk the stock and potentially begin to form a constructive long-term thesis from a lower earnings base," Citi writes.
Six analysts rate PFE at Strong Buy, two have it at Buy and nine call it a Hold. They expect the company to generate average annual earnings growth of 7.3% over the next three to five years.
Market value: $214.5 billion
Coronavirus is taking a huge bite out of some of Walt Disney's (DIS, $118.75) most important businesses.
"Disney is clearly facing unprecedented headwinds in its Theme Parks and Studio businesses," says Deutsche Bank, which rates shares at Hold. "The timing for these businesses fully recovering to pre-COVID earnings power is a function of when people can congregate at high density in mass numbers without meaningful risk of potentially deadly infection."
In a bright spot, Janney Montgomery Scott notes that Disney World opened the Disney Springs shopping and dining area to the public and is accepting hotel reservations starting in July. Shanghai Disneyland officially reopened on May 11th at 30% capacity, with tickets reportedly selling out within minutes, Janney adds.
Of the analysts covering this Dow stock, 11 have DIS at Strong Buy, five call it a Buy, 10 have it at Hold and two say Strong Sell. Their average target price of $122.23 gives DIS implied upside of about 3% over the coming year.
Market value: $292.3 billion
Dividend yield: 2.7%
Analysts' average recommendation: 2.09 (Buy)
As a consumer staples stock, mega-cap Procter & Gamble (PG, $118.06) is well positioned to weather the pandemic. People will always need products such as P&G's Charmin toilet paper, Head & Shoulders shampoo and Crest toothpaste.
In fact, more folks spending more time at home is boosting demand for PG products. Revenue in its most recent quarter benefited from "pull-forward of demand due to coronavirus-related buying," Stifel notes.
"Our Buy rating reflects upside risk to organic sales growth near-term reflecting coronavirus-related buying, particularly in Health Care, Fabric and Home Care, and Baby, Feminine, and Family Care, categories accounting for 71% of sales, offset by potential sales weakness in Beauty and Grooming," Stifel adds.
Nine analysts rate the stock at Strong Buy and four have it at Buy. Another nine call it a Hold and one says Sell. Their forecast for average annual earnings growth is middling among the Dow's 30 stocks, however, at about 7% over the next three to five years.
Market value: $70.2 billion
Dividend yield: 2.5%
Analysts' average recommendation: 2.08 (Buy)
Warren Buffett dumped a big portion of Berkshire Hathaway's stake in Goldman Sachs (GS, $204.14) in the first quarter, as the economic downturn takes a toll on financial stocks.
BRK.B dumped more than 10 million shares, or about 84% of its GS stake, during the first three months of the year. It was the second straight quarter that Buffett reduced Berkshire's holdings in the Wall Street investment bank. Even before the coronavirus crisis hit, Buffett sold nearly a third of his holdings during the fourth quarter of 2019.
The Street is more bullish on GS than is the Oracle of Omaha. Analysts applaud Goldman's strategy of bulking up business lines such as wealth management to make it less reliant on the vagaries of trading and investment banking.
Odeon Capital upgraded the stock to Buy from Hold, noting that the bank's investment-grade debt underwriting business is very strong this quarter, as is trading activity. "Wealth management is believed to be doing very well, also," Odeon notes.
Of the 26 analysts following the stock polled by S&P Capital IQ, nine call it a Strong Buy, six say Buy and 11 have it at Hold.
Market value: $390.8 billion
Analysts' average recommendation: 2.05 (Buy)
Health care stocks are known for their defensive characteristics, and Johnson & Johnson (JNJ, $148.25) has so far fulfilled that role. The pharmaceutical, medical devices and consumer goods has seen its stock rise not-quite 2% for year to date, vs. a drop of more than 4% for the S&P 500.
Credit Suisse notes that better-than-expected growth in Stelara, Opsumit, Erleada and Invega Sustenna/Trinza are helping the company's U.S. pharmaceutical sales.
"We do not expect JNJ's pharma franchises to be significantly impacted by COVID-19 at this time," adds Credit Suisse, which rates the stock at Outperform (Buy).
JNJ has suspended share repurchases to support the dividend, which continues to grow. The company announced a dividend hike in April, to $1.01 per share from 95 cents. That marked Johnson & Johnson's 58th consecutive year of dividend increases.
Eight analysts rate the stock at Strong Buy, five call it a Buy, seven say Hold and one has it at Sell.
Market value: $1.40 trillion
Dividend yield: 1.0%
Analysts' average recommendation: 2.03 (Buy)
Don't tell Apple (AAPL, $323.34) we're in the midst of the worst economic downturn in many decades. Shares in the iPhone maker are up more than 10% so far this year – far better than most Dow stocks – and we're not even at the halfway point.
Still, AAPL investors can't exactly be carefree right now. Simmering trade tensions between Washington and Beijing are dangerous for the company across its supply and retail chain.
Wedbush, which rates the stock at Outperform, notes that Apple's Focxonn factory in China "represents the hearts and lungs of the Cupertino iPhone franchise."
Trade risks aside, Wedbush says the picture is brightening.
"With stores opening up to strong demand throughout Asia and a handful of US stores opening their doors, coupled by a recovering supply chain which is on the path to normalization, it appears Apple is starting to lay the early groundwork for the next chapter of growth recovery," Wedbush analysts write.
Twenty analysts rate AAPL at Strong Buy, seven call it a Buy, eight say Hold, two have it at Sell and three say Strong Sell.
Market value: $271.8 billion
Dividend yield: 2.4%
Analysts' average recommendation: 2.00 (Buy)
If you like what Apple stock has been up to, you're going to love Home Depot (HD, $251.21). Shares in the nation's largest home improvement retailer are up about 16% for the year to date. And analysts say HD has more room to run.
While many retailers are only just beginning to reopen from the pandemic lockdown, Home Depot, an essential business, has been open the whole time. And its stores aren't just open – they're doing brisk business.
One of the few things you can do when trapped at home is to fix the place up, after all.
"We are clearly seeing the home winning share of wallet, even in the midst of the pandemic," writes Stifel, which rates HD at Buy. "We think this trend continues although the do-it-yourself surge may wane somewhat as people go back to offices and re-opened businesses."
Stifel adds: "In our minds … HD will gain share of wallet through this pandemic and can continue to grow at impressive rates on the other side."
A total of 21 analysts rate HD at either Strong Buy or Buy. Eleven say it's a Hold and one calls it a Sell. The consensus is for average annual profit growth of 7.9% over the next three to five years.
Market value: $176.8 billion
Dividend yield: 5.5%
Analysts' average recommendation: 1.92 (Buy)
Chevron (CVX, $94.69) stock is still down more than 20% in 2020, but it also has rallied a whopping 75% since the market's March bottom.
Plenty of analysts say there is more upside to come, though a few others say the valuation has gotten a bit stretched.
UBS, which recently downgraded the stock at Neutral after its hot run, says the price performance is due to Chevron's "leading reputation for capital discipline and the highly resilient, yet flexible financial model that CVX is running."
Chevron, like the rest of the oil and gas industry, has been forced to double down on capital spending cuts and other cost savings as it grapples with ultra-low energy prices. Credit Suisse, which rates CVX at Outperform, says the company expects to realize $1 billion in cost savings in 2020.
Of the 25 analysts covering the stock tracked by S&P Capital IQ, nine call it a Strong Buy, nine say Buy and seven rate it at Hold. Their average price target of $99.12 gives CVX implied upside of about 5% over the next year.
Market value: $351.2 billion
Walmart's (WMT, $123.94) heavy investments in its e-commerce business have really paid off over the past few years, and especially during the lockdown. As a one-stop shopping for all manner of goods, and consumer staples in particular, Walmart.com drove better-than-expected results.
"Food and consumables sales were strong, with broad-based strength across food items and consumables led by paper goods and household chemicals," Stifel says. "In addition, grocery pickup and delivery reached all-time high sales volumes."
Whether the outperformance can last is another question, Stifel's analysts write. "Management noted Walmart U.S. has had a solid start to May though the company believes spending due to U.S. Government stimulus checks has been a big driver, which the company views as transitory," adds Stifel, which rates the stock at Hold.
The breakdown from S&P Capital IQ is as follows: 16 analysts call WMT a Strong Buy, nine have it at Buy, nine rate it at Hold and two say Sell. The pros think the stock has about 9% upside over the next year, giving it an average price target of $134.52.
Market value: $201.4 billion
Dividend yield: 3.5%
Analysts' average recommendation: 1.82 (Buy)
Coca-Cola (KO, $46.90) is another longtime Warren Buffett holding, and although he sold stakes in 21 stocks in Q1, he didn't lay a finger on KO.
Analysts are bullish on the soft-drink maker, too, in large part due to Coca-Cola's Costa Coffee acquisition, as well as new products in the flavored sparkling water and energy drink categories. Ten analysts call it a Strong Buy, six say Buy and six rate it at Hold.
Coronavirus has hurt the company's top-line growth, but that shouldn't last much longer. Analysts expect KO sales to bottom out and begin their recovery in the current quarter.
"Clearly, from here, all attention is rightly focused on (first) the potential depth and duration of anticipated 2Q declines, and (second) the likely pace, trajectory, and sustainability of any recovery off that 2Q bottom," writes Deutsche Bank, which rates KO at Buy. "It is worth mentioning that KO finished 1Q in about as strong a position as we could have envisioned."
Analysts expect KO to generate average annual earnings growth of 3% over the next three to five years. Long-term income investors can take comfort in Coca-Cola's streak of raising its dividend, which currently sits at more than half a century. That puts it among the ranks of Wall Street's Dividend Kings.
Market value: $139.5 billion
Analysts' average recommendation: 1.74 (Buy)
McDonald's (MCD, $187.59) restaurants were forced to at least briefly close their doors during the pandemic, though many quickly resumed operations with drive-through and delivery options.
While most analysts are bullish on a recovery, some remain more cautious. For instance, Stifel, which rates the stock at Hold, thinks investors should curb their enthusiasm about the months ahead.
"Prior to the pandemic, McDonald's enjoyed sales momentum in domestic and international markets," Stifel writes. "Despite the global disruption to the business, we believe investors have high expectations for the system's rate of recovery, likely requiring quarterly results to exceed the Street average. All else being equal, we would consider becoming more constructive on MCD shares at a better entry point."
The bulk of analysts, however, remain bullish on the hamburger chain. Eighteen analysts rate MCD at Strong Buy, eight say Buy and nine call it a Hold. The Street expects long-term earnings growth of nearly 7% a year for the next three to five years.
As for income investors, you can't beat MCD for reliability. Its dividend dates back to 1976 and has gone up every year since. MCD last raised its quarterly payout in September, by 8% to $1.25 a share. That marked its 43rd consecutive annual increase.
Market value: $156.7 billion
Shares in Nike (NKE, $100.74) are roughly breakeven year-to-date versus a drop of about 5% for the broader market, and Wall Street sees more runway from here.
Partly that's because of the successful reopening of Nike stores in Asia, which will serve as a template for North America.
"Greater China and South Korea have 100% of owned and 95% of partner doors open," writes Stifel, which rates NKE at Buy. "Traffic trends are reportedly progressing, with physical store traffic below prior levels, partially offset by higher conversion and digital demand."
As for the digital side, Cowen (Outperform) adds that the accelerating shift to Nike.com strengthens the company's connection with core consumers.
The Street expects Nike to generate average annual earnings growth of almost 12% for the next three to five years, according to S&P Capital IQ. Eighteen analysts rate the stock at Strong Buy, nine say Buy, seven call it a Hold and one says Sell.
Market value: $96.1 billion
Dividend yield: 3.0%
Analysts' average recommendation: 1.73 (Buy)
Raytheon Technologies (RTX, $63.40), which entered the industrial average after its merger with Dow component United Technologies, has tumbled in 2020. Indeed, RTX is off by more than 30% so far this year.
But a slumping share price and healthy dividend make the stock look like a bargain to most of the Street. Twelve analysts rate RTX at Strong Buy, and six more say Buy. Meanwhile, just three call it a Sell and one has it at Strong Sell.
Credit Suisse (Buy) lays out some of the bullish thinking on the commercial aerospace and defense contractor:
"Though commercial aerospace will face significant near-medium term headwinds from COVID-19, we expect that it will nevertheless be significantly cash generative by 2022," CS notes. "With the stock's downside limited and approximately 40% potential upside to our 12-month target price, we very much like the setup here."
Analysts' average target price stands at $77.21, which gives RTX implied upside of about 22% over the next 52 weeks. That rates high among the 30 Dow stocks, and investors probably would be happy with that sort of return.
Market value: $204.0 billion
Analysts' average recommendation: 1.70 (Buy)
Like a number of health care stocks, shares in Merck (MRK, $80.84) have bounced back strongly since the March lows. The pharma giant has, however, underperformed versus the average of all 30 Dow Jones Industrial Average components.
Analysts believe that suggests value to be had.
The key to Merck's upside is Keytruda, a blockbuster cancer drug that's approved for more than 20 indications. Some analysts believe the company's vaccines and animal health businesses is undervalued as well.
Keytruda already is approved for treatment of lung cancer, melanoma, head and neck cancer, classical Hodgkin's lymphoma and bladder cancer. In June, the Food and Drug Administration expanded approval of the cancer-fighting drug to include additional indications.
Of the 20 analysts covering MRK tracked by S&P Global Market Intelligence, 11 rate shares at Strong Buy, four have it at Buy and five call it a Hold. They see roughly 16% upside over the next year, based on an average price target of $93.58.
Looking further down the road, the pros expect the pharma company to deliver average annual profit growth of 8% over the next three to five years.
Market value: $418.1 billion
Dividend yield: 0.6%
Analysts' average recommendation: 1.63 (Buy)
Few blue-chip Dow stocks get more love from analysts, portfolio and hedge funds than Visa (V, $196.36).
As the world's largest payments network, Visa is well-positioned to benefit from the growth of cashless transactions and digital mobile payments. Indeed, analysts polled by S&P Global Market Intelligence expect Visa's profits to increase an average of 13.3% annually over the next three to five years.
Although cross-border spending is down and doubts remain about how long consumer discretionary spending can hold up, analysts note there's an opportunity for Visa in technologies that allow consumers to avoid contact with one another.
"We believe V's model resilience will benefit from the ongoing massive shift away from Card Present (CP), as well as cash to Card Not Present (CNP), as well as to tap-to-pay," writes Wedbush, which has an Outperform rating on V shares.
SunTrust Robinson Humphrey, with a Buy rating, adds that Visa's U.S. debit-card volume remains robust.
Wall Street, on the whole, is solidly bullish on Visa. Of the analysts tracked by S&P Global Market Intelligence, 20 call it a Strong Buy and nine have it at Buy. Only five say it's a Hold and just one rates it at Sell.
Market value: $290.5 billion
Dividend yield: 1.4%
Analysts' average recommendation: 1.62 (Buy)
UnitedHealth Group (UNH, $306.31) has long rated among analysts' most beloved Dow stocks.
With a market value of more than $290 billion and a 2021 revenue forecast of $278.8 billion, UnitedHealth is the largest publicly traded health insurance company by a wide margin. Its girth alone makes it a natural way for large investors to gain exposure to the health care sector.
"We continue to believe that investors will tend to stick with market leading companies such as UNH as this crisis unfolds and, therefore, maintain our favorable investment rating on the stock," writes Credit Suisse, which rates UNH at Outperform.
Of the 26 pros tracked by S&P Global Market Intelligence, 15 rate UNH at Strong Buy and six call it a Buy; the remaining five have the insurer at Hold. That said, upside is modest from here, with an average price target of $327.27 implying 7% upside over the coming year.
Wall Street does expect UnitedHealth to churn out some serious profits, however. Collectively, they model 14.6% average annual earnings growth over the next three to five years, according to data from S&P Global Market Intelligence.
Dividend yield: 1.1%
Analysts' average recommendation: 1.50 (Strong Buy)
Microsoft (MSFT, $184.91) currently reigns as analysts' favorite Dow stock. It's the only one of the 30 blue chips to score a rating of Strong Buy, and there are no bears in sight. Twenty-two of the 36 analysts tracking MSFT rate it at Strong Buy, and another 10 say it's a Buy. Just four are on the sidelines at Hold.
The software and cloud computing giant has been one of the rare beneficiaries of the coronavirus crisis. Workers and students sheltering at home have lifted demand for everything from Microsoft 365 productivity tools to Xbox games.
"Microsoft's unique mix of cloud-based productivity tools (Office 365), its tightly integrated set of hybrid cloud infrastructure solutions (Server + Azure) and broad-based portfolio of Work/Play From Home products (Windows, Surface & Xbox Live) enabled the company to effectively support its customers during this difficult time and continue to gain share," writes Stifel, which rates the stock at Buy.
At the same time, MSFT is a port in a storm for income investors. The trillion-dollar-plus market value, massive amounts of cash on the balance sheet and gushers of free cash flow make Microsoft one of the safest dividend stocks around. Indeed, MSFT has raised its payout annually for more than 15 years.