Though you probably don’t need the reminder, Wall Street endured a challenging 2022. After all three major U.S. stock indexes notched new highs in 2021, they collectively plunged into a bear market last year and produced their worst full-year returns since the Great Recession.
However, the major U.S. stock indexes aren’t created equally. While the Nasdaq Composite finished 2022 down 33%, the ageless Dow Jones Industrial Average (DJINDICES: ^DJI) thrived in its own way. The share price-weighted index, comprised of 30 historically profitable, time-tested, multinational companies, ended last year lower by just 9%. The mature businesses that make up the Dow Jones are ideally suited to steadily build investors’ wealth.
What follows are three iconic Dow stocks that can safely double your money, inclusive of dividend payments, by 2028.
The first exemplary Dow stock with all the tools necessary to double your money over the next five years, including payouts, is payment processor Visa (NYSE: V).
Arguably the biggest headwind for this financial giant is the growing likelihood of the U.S. dipping into a recession. The Federal Open Market Committee’s March meeting minutes show that the 12-member body responsible for monetary policy decisions has modeled a mild recession into its outlook for later in 2023. Recessions typically coerce businesses and consumers to spend less, which would mean lower merchant fees for Visa.
But there are two sides to this story. Even though recessions are an inevitable part of the economic cycle, none has lasted longer than 18 months after World War II. By comparison, virtually all economic expansions go on for years. Long-term investors in Visa are able to take advantage of these disproportionately longer stretches of economic expansion.
Visa finds itself flush with opportunity as well. It’s the clear-cut market share leader in the U.S., with more than half of all credit card network purchase volume, as of 2021. Among the four major payment processors, it was the only one to increase its U.S. market share meaningfully following the Great Recession.
But there’s opportunity beyond the borders of the United States. A significant percentage of global transactions are still being conducted in cash, and multiple regions remain largely underbanked, including the Middle East, Southeastern Asia, and Africa. Visa has the pocketbook to acquire its way into these regions, or it can continue its organic infrastructure push.
As I’ve stated before, Visa’s best trait might be the fiscal discipline of its management team. Although lending would generate net-interest income and added fees for Visa, the company has chosen to strictly remain a payment processor. No direct lending exposure means no loan losses and no need to set aside capital to cover potential delinquencies during economic downturns.
With a sustained double-digit growth rate, Visa offers triple-digit return potential by 2028.
Walgreens Boots Alliance
A second iconic Dow stock that could deliver a 100% or greater total return by 2028 is healthcare company Walgreens Boots Alliance (NASDAQ: WBA).
Traditionally, healthcare stocks are highly defensive. Since we have no control over when we become ill, demand for everything from prescription drugs to healthcare services remains steady in virtually any economic environment.
Walgreens proved to be a rare exception to the rule during the COVID-19 pandemic. Because it’s a brick-and-mortar-based retailer, reduced foot traffic into its stores hurt all facets of its business, from front-end sales to clinic revenue. Walgreens is still trying to dig itself out of this hole, which is what’s giving investors a unique opportunity to grab shares on the cheap.
However, Walgreens Boots Alliance isn’t just a value play — it has genuine growth catalysts. It’s in the midst of a multiyear turnaround effort that’s seen the company reduce its annual operating expenses by more than $2 billion, sell non-core assets to reduce its outstanding debt, and put money to work in a number of higher-growth areas.
One initiative Walgreens has freely spent big bucks on is digitization. Although Walgreens will continue to generate the bulk of its sales from its physical stores, beefing up its online presence and revamping its supply chain are both critical to boosting its organic growth rate and improving its operating margin.
Another exciting venture for Walgreens is its partnership with, and majority investment in, VillageMD. As of Feb. 28, 2023, the two had opened 210 VillageMD health clinics co-located at Walgreens’ stores, with the goal of opening 1,000 in more than 30 U.S. markets by the end of 2027. What differentiates these clinics is the fact that they’re full-service and physician-staffed. They’re ideal for grassroots campaigns designed to draw repeat customers.
The cherry on the sundae for Walgreens is the company has increased its base annual payout for 47 consecutive years. The company’s current 6.1% annual yield, coupled with its historically cheap valuation, makes it a good bet to produce a triple-digit return in five years.
The third iconic Dow Jones Industrial Average stock that can double your money, including dividends, by 2028, is semiconductor solutions company Intel (NASDAQ: INTC).
One look at Intel’s first-quarter operating results paints a very clear picture of why shares have retraced more than 50% in a little over two years. A sizable drop-off in personal computer (PC) demand and weakness in data center chip orders have left Intel’s stock floundering. But in spite of this weakness and the company reducing its dividend to reduce its cash outflow, Intel is a solid candidate to produce a 100% total return in the coming five years.
The first thing to understand about Intel is that, like Visa, it’s cyclical. Although it’s susceptible to demand weakness during recessions, Intel should benefit from the natural expansion of the U.S. economy over time.
Another key point for optimists to consider is that Intel’s market share losses to rival Advanced Micro Devices aren’t nearly as worrisome as skeptics have advertised. Despite a rough first quarter, Intel is still the kingpin of PC, mobile, and data-center central processing unit market share, and that’s not changing anytime soon. The cash flow generated from its legacy PC business, combined with the expected long-term growth in enterprise data centers as businesses migrate their data to the cloud, should allow Intel to invest in high-growth initiatives.
As an example, Mobileye Global has thus far proved to be a wise investment. Mobileye, which provides advanced driver assistance systems (ADAS) and autonomous driving solutions, was acquired by Intel for $15.3 billion in 2017 and spun off during the fourth quarter of 2022. Mobileye’s current market cap of $33 billion — Intel still owns a majority stake in the company — is reflective of the enormous opportunity ADAS and autonomous driving offer.
But the most exciting thing about Intel might just be its newfound focus on its foundry operations. Intel is spending $20 billion to build two new manufacturing plants in Ohio, set to open next year, and it’s in the process of acquiring Tower Semiconductor for $5.4 billion. Becoming a key source of domestic production opens new revenue channels for the company and could make Intel’s foundry services a popular choice for companies not wanting to concern themselves with the logistical challenges of ordering from Asia-based fab companies.
Relative to its book value and earning potential, Intel is historically inexpensive and ripe for the picking.
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Sean Williams has positions in Intel, Visa, and Walgreens Boots Alliance. The Motley Fool has positions in and recommends Advanced Micro Devices and Visa. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 calls on Intel and long January 2025 $45 calls on Intel. The Motley Fool has a disclosure policy.