In this article, we will take a look at some of the best Dow stocks to invest in.
The Dow Jones Industrial Average dates back to May 26, 1896. Charles Dow, a journalist who helped start Dow Jones & Co. and The Wall Street Journal, created it as a simple way to keep score of the market. That early version would be almost unrecognizable today. It included only 12 companies, not 30.
The Dow didn’t enjoy a smooth start. Within a few months, it was already under pressure. By August 1896, the index had fallen more than 30%. Politics were part of the story as the US presidential election that year, a bitter contest between William McKinley and William Jennings Bryan, unsettled investors. Arguments over the gold standard filled newspapers and speeches, and markets reacted to the uncertainty.
The real stress test came decades later during the Great Depression. In 1932, the Dow dropped to 41.22, almost exactly where it had been more than 30 years earlier. An entire generation of gains disappeared. The climb back was slow and uneven. It took until the mid-1950s for the index to finally regain its pre-Depression highs.
Something similar played out during the Financial Crisis. The Dow sank to an intraday low of 6,547.05, a level last seen in 1997. From its October 9, 2007, peak of 14,165.53, that was a decline of nearly 54%. For investors watching in real time, it felt like the floor kept giving way. The recovery tested patience again, and the index didn’t break above its old high until March 5, 2013, more than four years and 1,004 trading days after the March 2009 bottom. It closed that session at 14,253.77.
More recently, the tone has shifted. Wall Street ended higher on January 5, with financial stocks doing most of the heavy lifting. Their gains pushed the Dow to a new all-time high. Energy stocks also moved sharply higher after a US military strike led to the capture of Venezuelan President Nicolás Maduro. When the market closed, the Dow was up 1.23%, finishing the day at 48,977.18.
In 2025 overall, the Dow gained 12.97% for the year. Its performance lagged slightly at times due to limited exposure to technology stocks. Even so, the index finished December up 0.7% and logged its eighth straight winning month, a streak not seen since 2018.
Given this, we will take a look at some of the best Dow stocks to invest in.
Our Methodology:
For this article, we began with a pool of 30 stocks from the Dow Jones Industrial Average (DJIA) and identified stocks with positive analyst sentiment. From that group, we picked 12 companies with the highest number of hedge fund investors, as per Insider Monkey’s database of Q3 2025, and ranked them accordingly.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
12. The Travelers Companies, Inc. (NYSE:TRV)
Number of Hedge Fund Holders: 47
The Travelers Companies, Inc. (NYSE:TRV) is among the best Dow stocks to invest in.
On January 5, Bank of America lowered its price target on The Travelers Companies, Inc. (NYSE:TRV) to $262 from $265 and kept an Underperform rating.
The firm said that pricing trends across P&C insurance products still look weak, similar to what played out in 2025. Pricing in liability lines remains supportive, but loss costs are climbing faster than prices. Personal auto rates have largely flattened, even as some investors are starting to expect declines after a period of strong profitability. BofA also noted that underwriter valuations do not look expensive, despite fundamentals moving in the “wrong direction.”
On January 2, The Travelers Companies, Inc. (NYSE:TRV) said that it completed the sale of its personal insurance business and most of its commercial insurance business in Canada to Definity Financial Corporation for about $2.4 billion. Travelers, the largest surety writer in North America, kept its Canadian surety operations as part of the deal.
The company plans to use roughly $0.7 billion of the net proceeds for additional share repurchases in 2026. The remaining cash will support ongoing operations and general corporate needs. Travelers expects the transaction and related buybacks to be accretive to earnings per share in 2026 and over the following years.
Jefferies LLC and Przygoda & Co. LLC acted as financial advisors on the transaction. Legal advice was provided by Skadden, Arps, Slate, Meagher & Flom LLP, and Stikeman Elliott LLP.
The Travelers Companies, Inc. (NYSE:TRV) provides property and casualty insurance across auto, home, and business lines. Its operations are organized into Business Insurance, Bond & Specialty Insurance, and Personal Insurance segments.
11. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 66
International Business Machines Corporation (NYSE:IBM) is one of the best Dow stocks to invest in.
On January 5, RBC Capital Markets raised the price target on International Business Machines Corporation (NYSE:IBM) to $350 from $300 and kept an Outperform rating.
The firm said that 2026 could be the year when AI tailwinds become more visible for companies that are ready for enterprise adoption. Those who are not may continue face pressure from the view that “AI is the death of software.” Enterprise spending appears to be stabilizing, with improvement showing up in select areas. GenAI is driving innovation, even as management teams stay cautious in their early 2026 guidance, the analyst noted.
International Business Machines Corporation (NYSE:IBM) is seeing solid momentum across its AI portfolio, including watsonx and Red Hat AI. The company has also partnered with Anthropic to integrate the Claude large language model into IBM’s software offerings, adding depth to its AI capabilities.
Hardware has played a role as well. IBM’s z17 mainframe platform, built with advanced AI inference features, has supported infrastructure demand. In the third quarter, that mix helped deliver 10% growth in the software business and 17% growth in the infrastructure segment.
International Business Machines Corporation (NYSE:IBM) focuses on hybrid cloud, artificial intelligence, and consulting services, serving enterprises around the world.
10. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 74
Cisco Systems, Inc. (NASDAQ:CSCO) is one of the best Dow stocks to invest in.
On January 5, TD Cowen analyst Shaul Eyal said the firm’s channel checks and industry conversions suggest that Cisco Systems, Inc. (NASDAQ:CSCO) acquiring Axonius “is not imminent and is currently not in our cards.”
TD Cowen also noted that names like SentinelOne, Varonis, and Tenable could attract interest from strategic and financial sponsors. Lower interest rates and the push to broaden security capabilities are driving those conversions, the analyst said.
Cisco Systems, Inc. (NASDAQ:CSCO)’s stock jumped more than 28% in 2025, and early signs from fiscal 2026 point to continued momentum.
First-quarter revenue rose 8% year-over-year. The pace may look modest for a company trading near a 30x P/E, but investors are focused on AI. Cisco said its infrastructure orders reached $1.3 billion, “reflecting a significant acceleration in growth.” Big tech spent heavily on AI this year, and the budgets are expected to rise again next year.
Net income increased 5% from a year earlier. At this point, Cisco’s case as an undervalued dividend stock largely rests on the durability of its AI infrastructure sales.
Cisco Systems, Inc. (NASDAQ:CSCO) designs and sells technologies that power the Internet. The company brings together networking, security, collaboration, applications, and cloud products into a single, integrated portfolio.
9. The Goldman Sachs Group, Inc. (NYSE:GS)
Number of Hedge Fund Holders: 75
The Goldman Sachs Group, Inc. (NYSE:GS) is among the best Dow stocks to invest in.
On January 5, Barclays raised its price target on The Goldman Sachs Group, Inc. (NYSE:GS) to $1,048 from $850 and kept an Overweight rating. The move followed updates across the large-cap bank group as part of the firm’s 2026 outlook. Barclays expects the same forces that fueled double-digit earnings growth and bank stock outperformance in 2025 to extend into 2026.
A January 6 report from Reuters showed The Goldman Sachs Group, Inc. (NYSE:GS) once again topping global dealmaking league tables in 2025. The year featured high-profile political events and a steady rise in larger transactions, and Goldman took market share to finish No. 1.
The growth of $10 billion-plus deals played a big role. There were 68 such transactions last year, totaling $1.5 trillion, more than double the prior year, based on LSEG data. Goldman advised on 38 of those deals, more than any other bank, with $1.48 trillion in total advised volume. It marked the strongest period for mega deals by count since records began in 1980.
Calling 2025 an “exceptional M&A year,” Goldman’s Global Co-Head of M&A Stephan Feldgoise told clients “it was an extraordinary M&A market,” driven by a “ubiquity of capital,” according to the firm’s 2026 M&A outlook.
Goldman ranked No. 1 in M&A fee revenue and total deal value, gaining share in both categories. The firm collected $4.6 billion in M&A fees. By deal volume, Goldman led the field, followed by JPMorgan and Morgan Stanley, with Bank of America and Citigroup next. In deals involving Europe, the Middle East, and Africa, Goldman’s market share reached 44.7% in 2025, a level seen only once before, in 1999.
The Goldman Sachs Group, Inc. (NYSE:GS) is a global investment banking, securities, and investment management firm serving corporations, financial institutions, governments, and individual clients worldwide.
8. Honeywell International Inc. (NASDAQ:HON)
Number of Hedge Fund Holders: 76
Honeywell International Inc. (NASDAQ:HON) is one of the best Dow stocks to invest in 2026.
On January 5, Mizuho analyst Brett Linzey lowered his price target on Honeywell International Inc. (NASDAQ:HON) to $240 from $250 and kept an Outperform rating. The changes came as Mizuho refreshed ratings and targets across the electrical equipment and multi-industry space for its 2026 outlook.
The firm said it sees “uneven terrain ahead” for the group, though it added that the “tariff fog” is starting to lift.
A day later, Honeywell announced an agreement with Technip Energies to deliver integrated LNG pretreatment and liquefaction solutions for Commonwealth LNG’s planned export facility in Cameron Parish, Louisiana. Honeywell said its modular technology should help speed up timelines, simplify execution, reduce construction risk, and improve production efficiency as energy demand grows.
Commonwealth LNG, which operates under the Caturus platform, plans to use Honeywell International Inc. (NASDAQ:HON)’s single-mixed refrigerant liquefaction technology along with six modularized coil-wound heat exchangers. The setup is designed to produce about 9.5 million tonnes of LNG per year. Honeywell said its heat exchangers allow high gas throughput in a compact footprint, supporting efficiency while improving safety and reliability.
Honeywell International Inc. (NASDAQ:HON) is a diversified industrial company serving customers across multiple industries and regions. Its operations are supported by the Honeywell Accelerator operating system and the Honeywell Forge platform.
7. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 78
The Coca-Cola Company (NYSE:KO) is among the best Dow stocks to own.
On January 5, Wells Fargo analyst Chris Carey added The Coca-Cola Company (NYSE:KO) to the firm’s Q1 2026 Tactical Ideas List. Wells said it likes how the stock is set up heading into early 2026. The firm stressed this is not a call on Q4 2025 or full-year 2026 guidance. Instead, its 2026 Year Ahead work points to improving US trends for Coca-Cola, with data expected to accelerate and potentially look best-in-class as year-over-year comparisons ease into the summer. Wells has an Overweight rating on the shares and a $79 price target.
What stands out is how well The Coca-Cola Company (NYSE:KO) is performing even as consumers remain cost-conscious and questions linger around the healthfulness of packaged food and drinks. Through the first nine months of 2025, organic sales rose 5%, while volume increased 1%. That kind of performance speaks to the strength of the brand and its pricing power.
The company’s consistency shows up clearly in its dividend record. Coca-Cola is a Dividend King, with more than 60 straight years of annual dividend increases. Its scale matters, too. It ranks as the fourth-largest consumer staples company in the world and competes comfortably with any peer on brand strength, marketing reach, distribution, and innovation.
The Coca-Cola Company (NYSE:KO) operates across multiple regions, including Europe, the Middle East and Africa, Latin America, North America, and Asia Pacific.
6. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 87
The Procter & Gamble Company (NYSE:PG) is one of the best Dow stocks to invest in.
On January 5, Wells Fargo lowered its price target on The Procter & Gamble Company (NYSE:PG) to $158 from $170 and kept an Overweight rating. The change came as the firm updated models across Beverage, Food, and HPC names heading into 2026.
The Procter & Gamble Company (NYSE:PG) is expected to generate close to $87 billion in revenue this fiscal year, which keeps it firmly at the top of the consumer goods industry. That kind of recurring revenue, combined with the company’s scale-driven marketing leverage, supports steady dividends and long-term dividend growth. It explains how P&G has paid a quarterly dividend without interruption for decades and raised its annual payout for 69 straight years.
What stands out is how shareholder-focused the model remains, as roughly two-thirds of profits are returned to investors through dividends and the rest stays in the business, funding brand investment and product innovation. That balance has helped P&G protect its position in consumer staples year after year.
The Procter & Gamble Company (NYSE:PG) focuses on selling branded consumer packaged goods to customers around the world.
5. NIKE, Inc. (NYSE:NKE)
Number of Hedge Fund Holders: 89
NIKE, Inc. (NYSE:NKE) is one of the best Dow stocks to invest in.
On January 6, RBC Capital Markets lowered its price target on NIKE, Inc. (NYSE:NKE) to $78 from $85 and kept an Outperform rating. The firm said Nike’s path to profitable growth remains intact, even if the timeline has stretched. Pressure from Greater China, weakness at Converse, and US tariffs are weighing on margins, the analyst wrote. Even after 8%–10% estimate cuts, RBC still expects about $3 in EPS by FY28. Recent share price declines have pulled the valuation closer to historical averages, and insider buying adds to the setup.
NIKE, Inc. (NYSE:NKE) shares are down nearly 17% in 2025. A big concern is how dependent the company has become on China. That relationship has paid off for decades. Roughly 18% of Nike’s footwear is still produced in China, a figure that was likely higher in earlier years. Lower-cost manufacturing helped the company control expenses and lift margins over much of its public history.
Over time, that same model carries trade-offs. Outsourced manufacturing can lead to technology transfer and brand dilution. According to ABC, Nike shoes rank among the most counterfeited products globally. Replicas have become so convincing that even experts struggle to spot the difference. Manufacturing know-how and materials are no longer concentrated, and Nike’s wide supply chain may be part of that story.
The impact is showing up in results. Nike’s footwear sales in China fell 20% in the fiscal second quarter, marking a sixth straight quarter of decline in what was once a core growth market.
NIKE, Inc. (NYSE:NKE) designs, markets, and distributes athletic footwear, apparel, equipment, accessories, and related services for sports and fitness worldwide.
4. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 89
Chevron Corporation (NYSE:CVX) is among the best Dow stocks to invest in.
On January 5, Bernstein raised its price target on Chevron Corporation (NYSE:CVX) to $172 from $170 and kept a Market Perform rating. The firm said it is heading into 2026 with a balanced outlook for oil. Bernstein expects near-term volatility, while still seeing strength over the longer run.
A January 6 report from Reuters said Caracas and Washington reached an agreement that would allow up to $2 billion of Venezuelan crude to be exported to the US. President Donald Trump described the deal as a key negotiation that would redirect supply away from China and help Venezuela avoid deeper production cuts.
Chevron stands out in this situation. It is the only US oil major operating in Venezuela under a US license that exempts it from sanctions aimed at restricting revenue tied to President Maduro’s government. On January 6, vessels chartered by Chevron were the only ships loading crude for export at Venezuela’s Jose and Bajo Grande ports, according to ship-tracking data. Chevron had resumed exports of Venezuelan oil to the U.S. on January 5 after a four-day pause. The company also called overseas workers back to its Venezuelan offices as flights into the country restarted. In recent weeks, Chevron has effectively become the only firm consistently exporting Venezuelan crude.
Chevron Corporation (NYSE:CVX) is an integrated energy company involved in oil and gas production, fuel and chemical manufacturing, and the development of technologies that support its operations and the broader energy industry.
3. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 92
On January 5, Wells Fargo added Merck & Co., Inc. (NYSE:MRK) to its Q1 2026 Tactical Ideas List. Wells said Merck is moving into what it calls a catalyst-rich stretch across FY26 and 2027. The firm expects the stock to find a footing once 2026 guidance clears a near-term overhang. That could open the door for investors ahead of key events in the first half of 2026, including detailed CADENCE results and Phase 3 CD388 data. Wells has an Overweight rating on the shares and a $125 price target.
Merck & Co., Inc. (NYSE:MRK) rose nearly 8% in 2025, though the story is not without risk. The company’s flagship cancer drug, Keytruda, is set to lose US patent protection in 2028. International patents extend into the early 2030s, and a newer version of the drug carries protections into the late 2030s. Those layers help soften the longer-term impact of the patent cliff.
The company has also stayed active on the deal front. Merck recently agreed to acquire Cidara Therapeutics for about $9 billion, adding a late-stage flu treatment to its pipeline. Like peers such as Pfizer, Merck has a long track record of navigating patent cycles and emerging stronger on the other side. The dividend adds another layer of stability. With a payout ratio near 45%, the dividend looks well supported and positioned to remain reliable.
Merck & Co., Inc. (NYSE:MRK) is a global health care company focused on prescription medicines, including biologics, vaccines, and animal health products.
2. Walmart Inc. (NASDAQ:WMT)
Number of Hedge Fund Holders: 104
Walmart Inc. (NASDAQ:WMT) is among the best Dow stocks to invest in.
On January 5, Mizuho analyst David Bellinger raised his price target on Walmart Inc. (NASDAQ:WMT) to $125 from $115 and kept an Outperform rating. The update came as Mizuho refreshed ratings and targets across retail broadlines, hardlines, and consumer internet names as part of its 2026 outlook. The group heads into 2026 with what Bellinger described as “signs of strained consumer sentiment, although the key underpinnings of spending are still very much intact.” Mizuho named Chewy as its overall Top Pick and removed Walmart, Lowe’s, and O’Reilly Automotive from its Top Picks list.
In a CNBC interview, TD Cowen analyst Chen said the leadership transition at Walmart Inc. (NASDAQ:WMT) is taking place from a position of strength. He pointed to the progress Doug McMillon made in reinforcing the company’s competitive stance against Amazon, especially through its blended bricks-and-clicks model and its push into online, AI, and other technology-driven initiatives.
He described incoming Walmart US CEO John Furner as a proven operator with deep roots inside the company. Furner’s experience running Walmart US stood out, along with his ability to manage people and execution at the same time. Chen said the role requires a mix of judgment, discipline, and technology know-how, and he believes Furner brings all of that to the table.
Chen also emphasized the scale of Walmart US’s grocery business, calling it one of the toughest areas in retail to dominate. From his perspective, Furner is stepping into a business that already runs like a well-oiled machine, especially in food, where consistency and execution matter most. Looking ahead, Chen acknowledged real challenges. Supply chain volatility remains an issue, and the rollout of AI across operations will not be seamless. Even so, he said Walmart’s track record of execution gives it an edge. The company has shown it can integrate technology while maintaining leadership in a core grocery business that anchors the broader operation.
Beyond traditional retail, Chen highlighted Walmart’s growing profit engines. Its digital advertising and retail media business already generates about $5 billion in revenue and operates at margins north of 60%, with room to expand significantly. He also pointed to the marketplace, which supports roughly 500 million sellers today and could grow far beyond that, adding another lever for performance over time.
Walmart Inc. (NASDAQ:WMT) operates as a technology-driven omnichannel retailer, combining physical stores, wholesale clubs, eCommerce platforms, and mobile applications into a single integrated model.
1. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 140
On January 5, Barclays analyst Andrew Mok raised his price target on UnitedHealth Group Incorporated (NYSE:UNH) to $391 from $386 and kept an Overweight rating. The firm expects managed care stocks to benefit in 2026 as margins recover and investor attention shifts away from artificial intelligence names toward stocks that have been left behind.
UnitedHealth’s share price tells a tougher story in the near term. The stock is down nearly 35% in 2025. Higher-than-expected visits to doctors and surgeons weighed on results, driving up medical costs. In May, the company suspended its full-year profit forecast after posting its first quarterly earnings miss in more than a decade.
Management pointed to rising utilization. More doctor visits and surgeries meant higher insurance payouts, and the company said it could not reliably estimate how much those costs might climb. Pulling guidance added uncertainty, and investors reacted quickly. That decision became a clear warning sign for the market and helped fuel the stock’s sharp decline this year. UnitedHealth’s adjusted EPS for 2025 is expected to be at least $16.25. Any outlook for 2026 that comes in only modestly above that level may prompt investors to stay cautious.
UnitedHealth Group Incorporated (NYSE:UNH) operates across health insurance and health services. Its businesses include Optum Health, Optum Insight, Optum Rx, and UnitedHealthcare, which serves employer, individual, Medicare, retirement, and government-sponsored plans.
While we acknowledge the potential of UNH to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than UNH and that has 100x upside potential, check out our report about this cheapest AI stock.
READ NEXT: 14 Best Dividend Growth Stocks to Buy and Hold in 2026 and 13 Best January Dividend Stocks to Invest In
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
