Walmart recently announced a 3 for 1 stock split, a significant move considering its status as a major component of the Dow Jones Industrial Average.
Since the Dow is a price-weighted index, this split will decrease Walmart’s weighting in the index, initiating a rebalance to accommodate the drop in price.
It’s intriguing to note that the Dow has been trailing behind the S&P 500 in performance YTD, increasing ~2.6% and ~5.4% respectively.
Potentially prompting the index to consider adding new stocks to compensate for the YTD underperformance.
The last time the Dow underwent a significant change was in August 2020. At that time, Salesforce, Amgen, and Honeywell were added, while Exxon, Pfizer, and RTX Corp were removed.
Unlike their usual practices, the Dow committee has delayed making changes for an extended period of time, reminiscent of the period from June 2009 to September 2012.
With the Dow undergoing rebalancing, I’m eyeing potential exits for IBM, Cisco, Intel, Verizon, and Walgreens Boots Alliance.
Additionally, I could see potential additions like Amazon, META, and Eli Lilly who have a wider touch on the economy.
Which stocks do you predict might be on the way out, and which new additions do you foresee?
