3 Fantastic Dow Stocks to Buy in February 2024
While the Nasdaq exchange and S&P 500 grabbed the headlines because of the massive run-up by the so-called Magnificent 7 stocks, the Dow Jones Industrial Average plodded on with its Dow stocks to buy. It recorded its own double-digit gains for the year, and ended 2023 at an all-time high. This was not too shabby for 30 stalwart stocks.
For more 125 years, investors have turned to the Dow to measure the health of the stock market and the direction of the United States economy. Although it’s still called the “industrial average,” the old line index is a closer cross-section of American business today than it’s ever been. With tech stocks, consumer products, restaurants, insurance companies and more, the Dow is an even better barometer of how things are going.
This year is off to a fine start and despite last year’s gains, there are still great Dow stocks to buy in February. What follows are three index components you should be buying today.
Verizon (VZ)
Telecom giant Verizon (NYSE:VZ) was the industry leader for a long time but took its eye off the ball and struck out. Both AT&T (NYSE:T) and T-Mobile (NASDAQ:TMUS) stole customers and market share that left Verizon scrambling. Now the tables are turning once more.
The telecom posted stronger than expected postpaid subscriber growth as it refocuses on wireless and broadband quality and 5G networks. The national 5G rollout is the first major upgrade to the infrastructure in a decade and gives rise to new use cases such as fixed wireless access and mobile edge computing. Data consumption is one of the most profitable areas of telecom and could push earnings even higher.
Verizon purchased large swaths of C-band spectrum back in 2021. This is critical bandwidth for its 5G network service and fixed wireless access business. It will become even more essential as it attempts to catch up to T-Mobile, which is now the industry leader. Verizon’s improvement shows up in its ability to raise prices with few customer defections. That allowed for average revenue per user (ARPU) to grow this quarter.
The telecom should be able to marginally grow its base, keep ARPU moving higher, pay down debt, and maintain its dividend. Verizon’s dividend of $2.69 per share yields a tasty 6.3% annually. This high-yield dividend stock has bounced sharply off last October’s lows and should maintain this momentum throughout the year and beyond. If you are looking for Dow stocks to buy, you can’t go wrong with this one.
Amgen (AMGN)
Amgen (NASDAQ:AMGN) is not quite the high-growth stock investors expect from biotechs. Yet its $172 billion market valuation means it makes long, sweeping curves, not sharp cuts back and forth. It also navigates support for a dividend that yields 2.7% and is well-supported by its business and cash flows. It plans to return approximately 60% of its adjusted profits to shareholders in the form of dividends and stock buybacks.
The biotech offers a solid portfolio of billion-dollar drugs. Its lead therapy is Prolia, a treatment for osteoporosis and bone cancer, that’s generated $2.9 billion in sales so far for 2023. Enbrel follows closes behind with $2.7 billion in sales. The autoimmune disease treatment, however, saw a 6% decline in Q3. In all, it has eight drugs that exceed $1 billion in annual sales. While its early generation of drugs like Enbrel are coming under pressure, its newer treatments keep sales moving forward.
What makes Amgen a biotech juggernaut though is the treatments in its pipeline. It invests its strong cash flows in research and development, typically spending more than $4 billion a year. AMGN stock is relatively cheap. It trades at just 16 times next year’s earnings estimates and 18 times free cash flow. The stock is up 30% over the past year but has plenty of room to run higher. This is easily one of the top Dow stocks to buy.
Microsoft (MSFT)
At more than $3 trillion, Microsoft (NASDAQ:MSFT) is once again the most valuable company. Artificial intelligence (AI) was the primary driver behind the tech giant’s Q2 earnings pushing the Azure cloud services business to a 600 basis point gain. It makes it a more potent challenger to Amazon‘s (NASDAQ:AMZN) AWS as it was able to sign bigger, longer-term deals.
Having integrated AI throughout all of its products and services it offers customers a complete platform of usability, efficiency, and growth. It has a suite of leading global franchises, including Windows, Office, SQL-Server, Xbox and LinkedIn. Although the PC business continues to shrink, Microsoft’s operations are substantially diversified making it a nearly bullet-proof company. Its tools are essential to business, its customers are loyal to its products, and its finances are in tip-top condition. It ended the quarter with over $81 billion in cash while producing more than $67 billion in free cash flow.
Microsoft also offers a dividend, but the $2.95 per share payment yields just a modest 0.7% annually. Yet the payout is well-covered by its cash flows with a lot of room for future growth. This is a great company to buy in February and hold for decades to come. If you are looking for Dow stocks to buy, start here.
On the date of publication, Rich Duprey held a LONG position in T stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
