Alphabet in Dow: 3 High-Yield Stocks to Buy
💡 Key Takeaway
While Alphabet joins the Dow, its low dividend yield makes CSCO, KO, and AMGN better choices for income investors seeking both yield and growth.
Alphabet Enters the Dow, but Dividends Lag
Alphabet (GOOG, GOOGL) joined the Dow Jones Industrial Average on June 29, replacing Verizon (VZ). The move brings advertising, cloud computing, and AI exposure to the index. However, Alphabet's dividend yield is just 0.3%, and its heavy AI investments limit near-term payout growth.
Meanwhile, three existing Dow members—Cisco Systems (CSCO), Coca-Cola (KO), and Amgen (AMGN)—offer stronger yields. Cisco reported strong Q3 results with revenue up 12% and net income up 35%, driven by AI-related demand. Its dividend yield is 1.5%, with 14 consecutive years of increases.
Coca-Cola continues to deliver consistent growth: Q1 revenue rose 12%, organic revenue up 10%, and dividend yield of 2.6%. The company boasts 65 consecutive years of dividend growth, earning Dividend King status.
Amgen posted 6% revenue growth in Q1 and is advancing its anti-obesity drug MariTide, which could compete with weekly shots if approved. Its dividend yield is 2.8%, with 15 years of increases.
Verizon, removed from the Dow, was not discussed in detail, but its replacement underscores a shift toward tech-heavy index composition.
Dividend Growth Meets AI and Consumer Demand
For income-focused investors, the Dow's evolution highlights a trade-off. Alphabet's entry brings growth potential but minimal yield. In contrast, CSCO, KO, and AMGN combine solid dividends with strong business momentum.
Cisco is benefiting from AI infrastructure spend, with record demand for its networking products. This could sustain its dividend growth and stock appreciation. Coca-Cola's global beverage portfolio provides defensive earnings, supporting its long dividend history.
Amgen's pipeline, especially MariTide, offers growth optionality. If approved, it could open a large obesity market, driving revenue and dividend increases. These stocks provide a balance of income and capital appreciation, unlike Alphabet's low-yield profile.
Investors seeking exposure to AI without sacrificing dividends may prefer Cisco, while those looking for stability and yield can look to Coca-Cola. Amgen bridges healthcare and growth. Alphabet's inclusion in the Dow validates its tech leadership but doesn't satisfy dividend hunters.
Source: The Motley Fool
Analysis generated by Bobby AI quantitative model, reviewed and edited by our research team. This is not financial advice. Always do your own research before making investment decisions.
Bobby Insight
Buy CSCO, KO, and AMGN for income and growth; avoid GOOGL for dividends.
Cisco, Coca-Cola, and Amgen offer attractive yields above sector averages with strong business fundamentals. Their dividend growth histories provide downside protection. Alphabet's inclusion in the Dow is positive for its profile but not for income seekers.
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