All about the Dow Jones Industrial Average—why it’s worth a closer look

• The Dow Jones Industrial Average (DJIA) is made up of 30 blue-chip US companies and stands as one of the world’s most trusted market benchmarks.
• Dating back to its creation over a century ago, the Dow has delivered solid long-term returns, though like any index, it can experience ups and downs in the short term.
• You can’t invest in the index directly, but ETFs can make it simple to own all 30 stocks in one trade.

1896 was a big year.

Prospectors discovered gold in Bonanza Creek, prompting the famous Gold Rush.¹

Utah became the 45^th state.

The modern Olympics were revived in Athens, Greece.

And Charles Dow and Edward Jones created the oh-so-cleverly named Dow Jones Industrial Average (DJIA).

For more than a century, the DJIA has been one of the most recognized benchmarks in the investing world. Often simply dubbed “the Dow,” this index of 30 large, established US companies is seen as a barometer of the US stock market and a symbol of American business strength.

So, all that fanfare aside, is it worth investing in?

The short answer: many long-term investors seem to think so (and, spoiler, so do we). The Dow is strictly composed of “blue-chip” stocks—companies with proven track records, financial stability, and global influence that can enhance a portfolio’s strength.

What is the Dow Jones Industrial Average?

The Dow Jones Industrial Average is one of the oldest and most widely followed stock market indexes in the world. When it was founded in 1896, the Dow tracked 12 major industrial companies, including General Electric, Tennessee Coal & Iron, and the US Rubber Company.²

Today, the DJIA follows 30 prominent, publicly traded companies—like Apple, Coca-Cola, and Microsoft—across a diverse range of industries, like technology, health care, finance, energy, and consumer goods. In many ways, these companies are the so-called “cream of the crop.” Long histories. Strong financials. And a reputation for resilience.

Often, the Dow is synonymous with quality. Investors are often drawn to it as a way to capture the stability of big-name companies without having to choose individual stocks themselves.

Here’s a look at the companies currently in the Dow. Think you know them all?

Is the DJIA a good option for passive, long-term investing?

The short answer: for many investors, the Dow has been a solid passive, long-term option.

We get this question frequently—and we see it pop up fairly often in investing forums, too: “Should I put my money in the Dow for 20+ years?” Historically, the Dow’s collection of blue-chip companies has rewarded patient investors over time, but as the usual compliance disclaimer goes, past performance is not a reliable indicator of future performance.

Why might the Dow continue to be a good option for passive, long-term investors? These are household names. Several operate globally. They boast balance sheets that would make a billionaire blush. And, perhaps most important of all, they possess the ability to adapt across market cycles.

Over the past 20 years, the Dow has averaged a 10.72% return, including dividends.³ That consistency has helped long-term investors ride out short-term market swings while still growing wealth.

If your goal is to build wealth steadily over decades (versus chasing the latest meme stock), consider how the Dow can play a role in your portfolio.

What is the average return of the DJIA?

Historically, the Dow’s average annual return is about 12.42%, with dividends.⁴ That’s dating back to 1988, though. Narrowing the window a tad, here’s a synopsis of more recent performance:⁵

Keep in mind, these are annualized returns, meaning cumulative returns divided by the number of years (i.e., a nice, clean number). Actual returns, from January to December of any given year, are rarely this consistent—which is the case for any broad market index or stock investment. As the calendar flips, you could see a 21% jump, followed by a 7% decline, leading into a 16% bounce back. In fact, that’s actually what happened from 2021 to 2023.⁶

How can you invest in the Dow?

You can’t invest directly in the index, but you can access it via funds like the SPDR® Dow Jones Industrial Average ETF Trust (DIA).

DIA holds all 30 companies in the index, so with a single trade you get exposure to the full basket of blue-chip names. That means you don’t have to buy Nike, NVIDIA, Johnson & Johnson, and 27 other stocks individually. The ETF does the bundling for you.

Think of an index like a recipe in a cookbook. The recipe tells you the ingredients (the companies) and proportions (how they’re weighted). You can’t eat the recipe itself—but you can follow the instructions and replicate it. In the same way, you can’t invest directly in the Dow, but you can invest in funds like DIA that follow its recipe.

Potential benefits of investing in the Dow

• Blue-chip exposure: The Dow is made up of 30 companies with established track records, global reach, and resilient business models. That’s usually a recipe for success.
• Longstanding benchmark: Since 1896, the Dow has served as a reliable measure of US market health. It’s lived through wars, recessions, pandemics, almost two dozen presidents, and, from the perspective of someone living in the 19th century, unfathomable innovation.
• Diversification across industries: The Dow spans sectors like technology, health care, consumer goods, finance, and industrials, giving investors access to many corners of the economy.
• Compounding (with some resilience): The Dow has delivered solid total returns over decades (which includes regular dividends), rewarding investors who stay invested through cycles. Since 1992, the Dow has had smaller average maximum drawdowns each year in comparison to the S&P 500.⁷

Potential tradeoffs when investing in the Dow

• Limited number of holdings: Compared to the S&P 500 (about 500 stocks) or total-market funds (thousands), the Dow’s 30 stocks mean less breadth.
• Price weighting quirks: In the Dow, a company with a higher share price has more influence on index movement than a lower-priced stock, regardless of actual company size.
• Sector skews: Many industries comprise the Dow, but it’s not perfectly balanced. Some sectors (like energy) may have only one or two representatives at any given time.
• Relative performance: While the Dow has a strong history of returns, it may not outperform other indexes, like the S&P 500, or Nasdaq.

Like any investment, investors should weigh the potential benefits and tradeoffs before investing. Here’s a quick overview for your scanning pleasure:

Why choose ETFs to access the Dow

ETFs make it simple to own the Dow. Instead of buying 30 individual stocks, you can purchase one ETF that includes all of them. That means instant diversification, less complexity, and a single ticker to track.

Some of the key advantages of using an ETF to invest in the Dow:

For example, the SPDR® Dow Jones Industrial Average ETF Trust (DIA) is the only ETF that tracks the Dow’s 30 blue-chip stocks directly. Seriously look it up.

The DJIA: An index worth exploring

We like to think Charles Dow and Edward Jones would be proud to know the Dow stands 30 companies tall.

While it isn’t the broadest index out there, many investors see its narrow focus as part of its appeal: quality over quantity. For investors interested in stability, diversification, and a time-tested track record, the Dow deserves a closer look.