7 underperforming Dow Jones dividend stocks are potential buys for 2025 despite market challenges

From Nasdaq: 2024-12-24 09:53:00

The Dow Jones Industrial Average is filled with industry-leading blue chip stocks that pay dividends, but it tends to underperform the S&P 500 during growth-driven rallies. Visa, Microsoft, Procter & Gamble, Coca-Cola, McDonald’s, Chevron, and Nike are Dow stocks that have underperformed in 2024 but are great buys for 2025.

Year to date, only 10 of the 30 Dow components are outperforming the S&P 500. Nvidia and Amazon were added to the Dow in 2024, but even well-known growth stocks like Microsoft are struggling. The S&P 500 is trading above 22 times forward earnings, indicating a historically high valuation amidst big gains from growth companies.

Investing during volatility is key to long-term wealth building. Visa, Microsoft, Procter & Gamble, Coca-Cola, McDonald’s, Chevron, and Nike have reasonable valuations, steady dividend growth, and proven track records. Chevron stands out for its balance sheet and low production costs, while Coca-Cola and P&G are reliable Dividend Kings.

Visa boasts one of the best business models globally, while Microsoft is well-balanced and continues to grow. Nike, however, faces challenges with slowing sales and margins. Despite this, Nike remains an underrated dividend stock with 23 consecutive years of dividend increases. Choosing the best Dow stock depends on individual investment objectives and preferences.

Before investing in Visa, consider the 10 best stocks identified by The Motley Fool Stock Advisor team. These stocks could potentially provide significant returns in the future. Visa wasn’t on this list, but historical returns from previous recommendations show the potential for substantial growth. Stock Advisor has outperformed the S&P 500 since 2002.



Read more at Nasdaq: 7 Dow Jones Dividend Stocks that Underperformed the S&P 500 This Year but Are Buys for 2025