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.
Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.
All investing and trading in the securities market involves a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax and accounting advisers, to determine whether such trading or investment is appropriate for that user.