Alphabet Just Replaced Verizon in the Dow. Could Nike Be the Next Dow Stock to Be Deleted?
Yahoo Finance ·
Just as I predicted , Honeywell International 's aerospace spinoff on June 29 was the catalyst for Alphabet to join the Dow Jones Industrial Average ( ^DJI +0.59% ) . With Alphabet replacing Verizon Communications , Nike ( NKE +1.74% ) is now by far the lowest-priced Dow stock . Here's why that matters, and why it could spell trouble for Nike's seat in the Dow. In its June 23 press release, S&P Dow Jones indexes specifically called attention to Verizon's lower share price as the reason for its removal, stating that it made up less than one-half of one percentage point. "The Dow Jones Industrial Average is a price-weighted index, and thus, persistently lower-priced stocks have an immaterial impact on the index," read the press release. Nike also makes up just 0.5% of the Dow. The stock is hovering around a 12-year low. And even when factoring in dividends, Nike has given shareholders a total return (capital gains plus dividends) of just 39.6% in its time as a Dow stock.
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