It’s happened to AT&T Inc. T. It’s happened to Citigroup Inc C. It’s happened to Chevron Corporation CVX, General Motors Company GM and Sears Holdings Corp SHLD's predecessor Sears, Roebuck & Co.
It might be time for General Electric Company GEto get the boot off the Dow Jones Industrial Average.
GE’s Dow Heritage
General Electric is one of the 12 inaugural components of the index and the only original still included. Having first joined the Dow in 1896, GE was removed two years later before returning in 1907.
Since then, it’s seen many a peer come and go.
The Wall Street Journal, which selects the stocks, has often inflated the index value by supplanting lower-priced, underperforming stocks with higher-priced companies, generally maintaining the mixed sector composition.
The process paved the way for Walt Disney Co DIS, Wal-Mart Stores Inc WMT, Boeing Co BA and Visa Inc V — and dozens of others — to forge their way on the ever-changing list.
GE's Future On The Index
Now, General Electric increasingly appears to fit the profile of firms meriting replacement.
Management halved its dividend this month; the stock has fallen 42 percent year-to-date, weighing down the Dow’s 19-percent gains; and the Street has little confidence in near-term improvement. A majority of analysts advise holding or selling, and CNBC’s Jim Cramer recently criticized the company’s board as worthy of his wall of shame.
If the Journal opts to drop General Electric, a number of stable, enduring firms could vie for its spot.
Alphabet Inc GOOGL GOOG, Amazon.com, Inc. AMZN or Facebook Inc FB could join fellow FAANG juggernaut Apple Inc. AAPL, on the list, increasing the Dow’s overlap with the SPDR S&P 500 ETF Trust SPY and better aligning the Dow with the S&P 500’s tech representation.
Other best performers of 2017 demonstrating long-term stability include Square Inc SQ, Alibaba Group Holding Ltd BABA, Universal Display Corporation OLED, NVIDIA Corporation NVDA and Take-Two Interactive Software Inc TTWO.
Joel Elconin contributed to this report.
Photo courtesy of GE.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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