The Dow Jones Industrial Average stock index could soon include Apple and/or Google in its listing of elite stocks, according to Barron’s. In doing so, the companies could replace Alcoa, Bank of America, and/or Hewlett-Packard on the 116-year-old list.
Last updated in 2009, the Dow 30, as it is called, is an index that shows how 30 publicly traded large U.S. companies fair in the stock market each day. Three years ago, The Travelers Company and Cisco Systems replaced General Motors and Citigroup on the list.
However, the way the current index is calculated could make it difficult to add Apple and/or Google, at least immediately. This is because the Dow weighs its 30 components based on the absolute price of their shares. Because of this, Apple and/or Google might have to split their stock to join the Dow 30. According to the report, Apple would have to split its shares by five-for-one or 10-to-one. Both Apple and Google are trading at around $600 per share. This would mean Apple’s inclusion in the index, for example, would overwhelm the index with a 26 percent weighting. IBM, priced at around $205 per share by contrast, gives it a 12 percent weighing in the index, Barron’s said.
The last time Apple split their stock was in 2005.
First launched in 1896, the Dow 30 currently includes seven technology-based companies. In addition to Cisco, HP (added in 1997) and IBM (1979), the index includes AT&T (1999), Intel (1999), Microsoft (1999), and Verizon Communications (2004).
Apple stock for perhaps $60 per share! Would you like to see Apple added to the Dow 30 even if it means a stock split would likely be necessary?