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AAPL enters the DOW 30 on Mar. 18th – At&T leaves!

March 6, 2015

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Apple (AAPL) is finally joining the Dow Jones Industrial Average, replacing AT&T(T). The change is expected to take place after market close on March 18.

The change will be effective with the opening of trading Thursday, March 19. The average change was prompted by Visa’s 4-for-1 stock split, which is scheduled to be effective at the same time. Needless to say, we can expect to see some volume and a slight increase in the volatility on the markets on March 18th.

AT&T has a market value of nearly $175 billion, while Apple has a market capitalization of about $736 billion, making it the largest publicly traded company in the world. The Dow is now more weighted towards the technology sector now that it got rid of a utility/telecom company and added the world’s biggest technology company Apple. However, since Apple is over 56% weighted towards the iPhone, then it’s really a high tech phone/utility company. Apple a boring telecom/utility company? No way. Yep, sorry; without the iPhone they would be a sour Apple.

After-effects of a company’s transition to and fro from an index is that when a company is added, it gains more volume (and mostly buying volume) because now it’s in an index that a lot of funds are tied to that mutual funds are buying on a regular basis. Also, the company leaving is on the short end of that stick now from losing that volume and fund exposure. To take a step of thought further, what does that say about Verizon versus At&T? Verizon (VZ) is still on the Dow, but At&T is chosen to be kicked out.

I still like AT&T, and love it even more when it dips since it’s one of my favorite dividend stocks. It currently pays 5.62% dividend yield per year, and the more it drops, the better the dividend yield becomes. For example, a stock paying 5% dividend and trading at 40 per share drops to 20 per share now has a yield of 10%. Not all stocks drop when being removed from the DOW, though; some have soared after. We can only see the reaction following the 18th.

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4 Replies to “AAPL enters the DOW 30 on Mar. 18th – At&T leaves!”

  1. Avatar Solon Stephanou says:

    Hi @gino. Are we to assume that this would make AAPL a stronger buy following its retracement?

  2. It could definitely help AAPL from the buy volume, But AAPL overall volume is very high in comparison to what the new volume coming in will be. Still always wait for your setup and trigger points to get in. ALWAYS in this order Trend-Setup-Trigger

  3. Avatar fidel serrano says:

    that affect the QQQ

  4. AAPL is already in the QQQ, not the Dow yet

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