Apple, the most valuable company on the planet, is finally getting the recognition it deserves from the people that run the world’s most well-known stock market index. Apple will join the Dow Jones Industrial Average later this month.
Apple (Tech30) will replace , AT&T (Tech30) in the Dow — an exclusive club of 30 stocks that also includes tech giants , Microsoft (Tech30), , Intel (Tech30) and , Cisco (Tech30) as well as brand-name consumer firms , Walmart (, )Coca-Cola ( and )Disne (y. )
“As the largest corporation in the world and a leader in technology. Apple is the clear choice for the Dow Jones Industrial Average,” said David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices.
Apple will enter the Dow at the close of trading on March 18. The company, maker of the enormously popular iPhone, is set to hold an event next Monday in which it is widely expected to give more details about its new Apple Watch.
Shares of Apple were up 1.6% in following the Dow news. The company is now worth nearly $ 750 billion and some analysts think that it could reach the $ 1 trillion level at some point in the next few years.
Apple has made a lot of professional and mom-and-pop investors a lot richer in the past few years. The stock has soared nearly 1,000% since the current bull market began six years ago and it is up more than 2,700% since the Nasdaq tech bubble burst in 2000.
What took the Dow so long? Now you might be wondering why Apple is only now being added to the index. It took this long for the people who run the Dow to recognize that it’s a more important company than AT&T? (Heck, where would AT&T be these days if not for Apple and the iPhone?)
The main reason is that up until recently, Apple’s stock price was too high to be considered for the Dow. The Dow is actually a price-weighted average of 30 stocks. So if you have one stock with an extremely high price, it could skew the Dow’s performance.
This is no longer an issue following Apple’s big stock split last year. The company increased the number of shares it had by a factor of seven.
That reduced the share price from about $ 645 a share to $ 91 … but it did not change the overall value of the company. If you owned 100 shares of Apple before the split, you simply wound up with 7 at the lower price.
Still, even at Apple’s current price of just shy of $ 130, there are five Dow companies with a bigger stock price: Boeing (, )Caterpillar (, )IBM (Tech30), , Goldman Sachs ( and )Visa (. Visa actually has the highest price, at $ 274 a share. But Visa’s price is also about to shrink since it too will soon split it stock. )