The Dow Jones Industrial Average (DJINDICES: ^DJI) had a total return of 14.9% in 2025, falling short of the Nasdaq Composite’s 21.1% total return. The Dow has underperformed the Nasdaq in eight of the last 10 years. Financial stocks, like Goldman Sachs and American Express, are the largest sector in the Dow at 28.3%.

The Dow is price-weighted, not market-cap weighted like the Nasdaq and S&P 500. This means high-priced stocks, like Goldman Sachs and American Express, carry more weight in the index. The Dow’s top holdings include Goldman Sachs, Caterpillar, and Microsoft. The addition of growth stocks like Nvidia and Amazon has shifted the index’s focus.

Over the last decade, the Dow has outperformed the Nasdaq and S&P 500 in only two years. The Dow is seen as a stable investment during market sell-offs, especially if driven by factors like artificial intelligence. The Dow has a lower P/E ratio compared to the S&P 500 and Nasdaq ETFs, making it potentially resilient in 2026.

Investors looking to balance a growth-driven portfolio can consider dividend-paying Dow components like Coca-Cola, Procter & Gamble, and McDonald’s. These companies have a history of increasing dividends, making them attractive for long-term investments. The Dow may outperform the Nasdaq and S&P 500 in 2026 if tech stocks face challenges.

The Motley Fool’s Stock Advisor team has identified the 10 best stocks for investors to buy now, excluding the Dow Jones Industrial Average. The team has a track record of market-crushing returns, with opportunities for significant growth. Investors should consider the team’s recommendations for potential high returns in the coming years.

Read more at Yahoo Finance: After Underperforming the Nasdaq for 8 of the Last 10 Years, the Dow Will Beat the Nasdaq and S&P 500 in 2026