While investing can get complicated quickly, keeping things simple by adding industry-leading companies to your long-term holdings tends to work out over the years. Whether investors are seeking safe stock picks in an uncertain macroeconomic environment or they are simply interested in owning companies that can offer steady gains over the years, focusing on strong companies in the Dow Jones Industrial Average is usually a solid strategy. With that said, not all components of the DJIA are worth a look, particularly with the way inflation and other factors could weigh on their earnings going forward.
That’s why we’ve decided to put together a list of 3 industry-leading Dow stocks to buy now so that you can focus on owning the best of the best. Each one of these companies has bright growth prospects going forward and has a dominant market position in their respective industries, making them great picks for long-term investors to consider. Let’s take a further look at what sets these stocks apart.
This company is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives and could be a great option for investors to consider at this time. Caterpillar is set to benefit from a huge uptick in infrastructure spending both in the United States and abroad, while construction activity is also set to rebound following the pandemic. All of this adds up to strong demand for Caterpillar’s iconic yellow heavy machinery, which should boost the company’s sales in a big way over the next few quarters.
Caterpillar is also a great pick in the Dow Jones Industrial Average thanks to the company’s impressive balance sheet and an attractive dividend yield of 2.01%. The company posted Q4 adjusted EPS of $2.69, up 27% year-over-year, which confirms that sales are bouncing back following a rough patch resulting from the pandemic. The bottom line here is that Caterpillar is one of the most valuable brands in the world and a company that plays a key role in the global economy, making it a fantastic option to consider at this time.
Next we have Walmart, which is the largest retailer in the world by sales. With over 11,000 stores located in North America and internationally, this is definitely an industry-leading company that investors can rely on for stable earnings growth and steady dividend increases. In fact, the company is a dividend aristocrat and has increased its payouts for 49 consecutive years. Walmart is a great stock to own at this time given how inflation is weighing on consumers, with plenty of people interested in saving money on basic goods.
Keep in mind that the company has purchasing leverage that helps it keep its prices low, which is certainly appealing to a lot of retail consumers out there. There’s also a lot to like about Walmart’s investments in developing its omnichannel retail experience, which should lead to even more industry dominance over the long term and provide a runway for nice earnings growth. The company posted adjusted EPS of $1.53 in Q4, up 10% year-over-year, and CEO Doug McMillon mentioned that the company has been gaining market share in the U.S. grocery and consumables market, which is certainly a big positive to consider. There aren’t many stocks that are set to perform well during economic booms as well as recessions, which certainly makes this industry-leading Dow stock a solid choice.
UnitedHealth Group (NYSE:UNH)
This leading U.S. managed health care firm is another great example of a high-quality company that investors can bank on for the long term. This is reflected in the fact that it’s one of the few Dow stocks trading at all-time highs at the moment. It’s hard to understate the scale of UnitedHealth’s business, as the company provides medical benefits to over 50 million individuals. Whether it’s traditional risk-based health insurance plans, pharmacy benefit management, or health care delivery and optimization, it’s safe to say that UnitedHealth plays an essential role in our country’s healthcare system.
The company posted revenue growth of 12.6% in Q4 to $73.7 billion and could be poised for a strong 2022 thanks to Medicare Advantage member growth. There’s also a lot to like about the company’s recent acquisitions, including the deal to purchase an in-home health company called LHC Group for $5.4 billion. This move should help the company expand into a market that is growing quickly, as aging baby boomers are increasingly looking for at-home health services. UnitedHealth is certainly not a cheap stock by any means, but oftentimes in the market, it can really pay off to go after quality.
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