The iconic Dow Jones Industrial Average has evolved from an index dominated by industrial stocks in the late 1800s to one now comprised of 30 diverse, multinational, and proven companies.
Everything from Verizon’s stock price to its minimum growth rate indicates that the S&P Dow Jones Indices have shown it the door.
Verizon’s likely replacement strikes a perfect balance between technology and communications, with a near-monopoly added to the mix.
On May 26, 2026, the emblematic Dow Jones Industrial Average(DJ CLUES: ^ DJI) will celebrate its 130th anniversary since its official creation.
When it was created, the Dow was an index dominated by a dozen industrial stocks. But over the past century and changes, it has evolved into a global index comprised of 30 diverse, multinational, and proven companies.
But these components are not static. Since the Dow Jones Industrial Average is a stock price-weighted index, companies that underperform over long periods of time or those that lose relevance, whether within the index or the U.S. economy, are eventually removed and replaced.
Image source: Getty Images.
The index has undergone nearly five dozen changes since 1896a few of which are recognized as nothing more than official company name changes or a public company merging with an existing Dow component. Most of these adjustments involve excluding laggards from the Dow in favor of companies with better long-term growth prospects and more representative of the U.S. economy.
In 2026, I think we’ll see the 60th change in the Dow Jones Industrial Average in 130 years, with the telecommunications titan VerizonCommunications(NYSE:VZ) get the unceremonious uprising and a trillion dollar juggernaut to replace it.
Verizon first entered the timeless Dow Jones Industrial Average in April 2004, replacing its main rival, AT&T. The proliferation of wireless cellular services, coupled with the fact that cell phones became a basic necessity that consumers and businesses didn’t want to live without, offered a compelling long-term growth story.
But several issues strongly suggest that Verizon is a candidate to see the door open in 2026.
For starters, Verizon stock ended the January 21 trading session at just $39.24 per share. While the S&P500 And Nasdaq Composite are market cap-weighted indices, Dow points are determined entirely by stock price and the Dow divisor. In other words, the higher a company’s nominal stock price, the more influence it has within the Dow Jones.
Only four Dow components have a stock price below $111, with Verizon’s nominal stock price significantly lower than the nearest Dow-30 stock, Nikewhose shares closed at $65.41 on January 21. Verizon only accounts for about 241 of the Dow’s 49,077 points.
Another criticism of Verizon is that its shares have barely advanced, except for dividend payments, since its inclusion in the index on April 8, 2004. According to YCharts data, Verizon shares have gained only 17% in nearly 22 years.
The third and final blow to Verizon is its long-term growth potential. Although it has an ultra-high yield of 7% and generates predictable operating cash flow with relatively low wireless churn, there is little hope for an annualized growth rate above 10%, given the already high national saturation of wireless and broadband. This is a solid communications company that is not necessarily representative of today’s economy.
Image source: Getty Images.
Keeping in mind that the S&P Dow Jones Indices – the entity responsible for adjustments to Wall Street’s iconic index – would want a replacement with a nominal three-digit stock that is a key player in one or more aspects of the US and global economy, the most logical replacement for Verizon in the Dow is Google’s parent company and member of the billion-dollar club, Alphabet(NASDAQ:GOOGL)(NASDAQ:GOOG).
Be careful, several candidates would make sense. T-Mobile would represent a lateral move that offers a faster long-term growth rate compared to Verizon. Meanwhile, the social media titan Metaplatforms would bring significant exposure to the Dow Jones advertising industry. However, Meta’s stock price of over $600 may be too extreme on the high end to include (Meta has never split its shares) and T-Mobile’s operating model may be too similar to Verizon’s. It could be in the same boat as Verizon in a decade.
Alphabet strikes the perfect balance between technology and communication.
On the one hand, Alphabet generated 72.5% of its net revenue in the quarter ended September from advertising. This includes its search engine Google, which has a near-monopoly in the global share of Internet searches, as well as YouTube, the second most visited social site on the planet. Because advertising is cyclical, Alphabet would serve as a valuable barometer of advertising health for the Dow Jones Industrial Average.
However, Alphabet is also a pioneer in cloud computing and artificial intelligence (AI). Its cloud infrastructure services platform, Google Cloud, ranks third globally in total spending on cloud infrastructure services. This high-margin operating segment incorporates generative AI solutions that further accelerate its sales growth rate by more than 30%.
In addition to Alphabet’s two-pronged growth approach, the company’s stock price performance is likely to speak (if not shout) to the S&P Dow Jones Indices. Since its IPO in August 2004, Alphabet’s shares have risen at a compound annual rate of more than 25%. This is the type of measurable growth that can push the Dow above and beyond 50,000.
Additionally, Alphabet conducted a historic 20-for-1 forward stock split in July 2022. This split reduced its stock price from around $2,200 to around $110. Before its split, Alphabet had no chance of joining the Dow, as its ultra-high stock price would have dominated the index. With its shares now hovering around $330, it would rank as the ninth most influential company in the Dow Jones Industrial Average.
Of the five most valuable public companies on Wall Street, Alphabet is the only one not currently part of the Dow Jones. I think this will change before the end of 2026.
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Sean Williams holds positions at AT&T, Alphabet and Meta Platforms. The Motley Fool holds positions and recommends Alphabet, Meta Platforms and Nike. The Motley Fool recommends T-Mobile US and Verizon Communications. The Motley Fool has a disclosure policy.
