It is with a degree of seasoned observation that one notes the approaching sesquicentennial of the Dow Jones Industrial Average. One hundred and thirty years have passed since its initial formation, and while the original assemblage of a dozen industrial concerns possessed a certain rustic simplicity, the index has, naturally, undergone a considerable evolution. It now encompasses thirty companies, each vying for a position of influence – a situation not unlike a well-appointed ballroom, where alliances shift and reputations are constantly under scrutiny.
Such an assemblage is, of course, not immutable. A company’s standing within the Dow, one might observe, is not unlike that of a family estate. Long-term performance, or a perceived lack thereof, will inevitably lead to a reassessment of its position. A decline in relevance, whether within the broader economy or simply a failure to maintain a respectable pace of growth, will ultimately result in its removal – a circumstance rarely met with good grace, one imagines.
Over the decades, nearly sixty alterations have been made to the index, though a good number of these are merely adjustments to names or the result of mergers – a tidy consolidation of fortunes, if one may call it that. The more significant changes, however, involve the displacement of lesser performers by those demonstrating a more promising future. It is with this in mind that one anticipates a further adjustment in the year 2026, a circumstance which, while predictable, is nonetheless attended with a certain degree of social consequence.
One ventures to suggest that Verizon Communications is likely to find itself removed from the Dow’s esteemed ranks. It entered the index in 2004, replacing AT&T, at a time when wireless communication held a particular allure. However, a closer examination reveals a certain stagnation, a lack of the vigorous growth one might expect from a company of its stature. Its current share price, a mere $39.24 as of late January, is a matter of some concern, particularly when compared to the more robust valuations of its peers. The Dow, one must remember, is a system governed by nominal share price, and a company’s influence is directly proportional to this figure. To be positioned amongst the lower ranks is, naturally, a disadvantage.
The fact that Verizon accounts for a relatively small portion of the Dow’s overall points – a mere 241 out of 49,077 – is a further indication of its diminishing prominence. One cannot help but observe that its growth potential appears limited, constrained by a saturated market and a predictable revenue stream. It is, in short, a stalwart, but lacks the dynamism one might seek in a company representing the future of the American economy.
And so, one turns to consider a suitable replacement. It is imperative that any new addition possess both a respectable share price and a significant role in the economic landscape. In this regard, Alphabet, the parent company of Google, appears particularly well-suited. Several candidates, such as T-Mobile, might offer a lateral shift, while Meta Platforms could bring exposure to the advertising industry. However, Meta’s high share price is perhaps a touch excessive, and T-Mobile’s business model bears too close a resemblance to that of Verizon. A repetition of the same circumstances would be most undesirable.
Alphabet, on the other hand, strikes a pleasing balance between technology and communication. Its advertising revenue, generated through Google and YouTube, accounts for a substantial portion of its overall income. This would provide a valuable barometer of advertising health for the Dow. Furthermore, its cloud computing and artificial intelligence initiatives demonstrate a commitment to innovation and growth. Its shares have increased at a compound annual rate of over 25% since its initial public offering – a performance that cannot be ignored.
The 20-for-1 stock split in 2022, reducing its share price to a more manageable level, has removed the final obstacle to its inclusion in the Dow. It is now poised to join the ranks of the most valuable public companies in America, and one anticipates that this will indeed come to pass before the close of 2026. A sensible adjustment, one might add, and one that reflects the shifting fortunes of the industrial realm.
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2026-01-26 12:12