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Growth is accelerating again at Amazon, and that makes the recent Dow 30 inductee worth watching.
Coca-Cola has a long streak of dividend hikes with a payout ratio that has actually moved lower in recent years.
Disney's forward earnings multiple in the high teens could be even lower if just some of its latest moves pay off.
Amazon (NASDAQ: AMZN), Coca-Cola (NYSE: KO), and Walt Disney (NYSE: DIS) are some of the country's most popular consumer brands. They also happen to make up a tenth of the Dow Jones Industrial Average (DJINDICES: ^DJI).
I have nothing against the other 90% of the stocks make up the widely tracked 30-stock index, but I'll stick with Amazon, Coca-Cola, and Disney. They are three of the Dow 30 stocks that I think are positioned well to soar for the rest of 2025 and beyond. Let's take a closer look.
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It's hard to believe that the world's leading online retailer didn't punch its card to get into the Dow 30 until last year, but it's up a brisk 28% since the induction 18 months ago. The index is up less than 15% in that time, so the Amazon expedition is paying off so far for the Dow 30.
Amazon's inclusion comes as growth slows for the dot-com icon. It has an applause-worthy run of growing its net sales by 9% or better in each of its first 28 years of trading, but it's been clinging to the low end of that range in recent years. Its top line has risen by 9% to 12% in each of the last three years, and it kicked off 2025 in uninspiring fashion when net sales climbed a mere 8.6% higher. It seemed as if the Dow 30 was too late on Amazon, but last month we saw a surprising acceleration of growth.
Image source: Getty Images.
Net sales rose 13% for Amazon's second quarter, which it announced at the end of last month. An 11% increase for its North American segment sales was nice, but the 16% jump in its international business -- fueled partly by a sluggish dollar -- was even better. The real star continues to be its high-margin Amazon Web Services (AWS) cloud business, up 18% for the quarter. It's just 18% of the revenue mix for Amazon, but it brought in more than half of the company's operating profit.
The bottom line fared even better. Net income per share rose 33% to $1.68 a share. It was another double-digit percentage earnings beat for Amazon. Three months ago the e-tailing behemoth was forecasting just a 4% increase in operating profit on a 7% to 11% year-over-year bump in net sales. Business keeps accelerating for Amazon.
The stock isn't cheap if you consider that it's trading for nearly 30 times next year's earnings. It's fetching nearly 4 times trailing net sales, a stiff multiple for retail stocks but a bargain if you focus on the AWS business that also makes it a tech services company. You have to like how Amazon is starting to accelerate its business again. Its guidance for the current quarter calls for net sales to rise 10% to 13%. The way it blew the cover off the ball last time, it shouldn't surprise anyone if its top line finds a way to rise in the mid-teens for the first time in three years. It's putting the "magnificent" in the "Magnificent Seven."
Turning to a bubbly stock, Coca-Cola is the undisputed global leader in the realm of pop. It's also a global juggernaut among beverage stocks with 30 different brands generating more than $1 billion in annual sales each. You didn't think that Coca-Cola was just about the namesake beverage, did you?
Coca-Cola is a high-margin business with a long string of positive profit surprises. It's not just a reliable source of sugary escapism or hydration. Income investors collecting today's 2.9% yield know that they can bank on this Dividend King to continue boosting its payouts the way it has for 63 straight years. With a trailing payout ratio of 69%, there is more than enough wiggle room to stretch that streak to 64 next year.
There are some legitimate concerns about soda consumption trends, but Coca-Cola loves to climb that wall of worry. Revenue should climb for the fifth year in a row in 2025.
I couldn't write about my favorite Dow 30 stocks without mouse droppings. Disney is the global entertainment leader that also happens to operate the world's most popular theme parks. It's a historical laggard. It has delivered just three fiscal years of double-digit revenue growth in this millennium. This might not seem to make it a good time to invest in Disney, but the future is brighter than its storied past.
Disney is getting back into a good groove at the multiplex after putting out the world's three biggest movies last year. Its theme parks have been generating strong results coming out of the pandemic. Disney+ is now profitable, dramatically boosting the media stock's bottom line. Its latest tweak -- today's launch of the new ESPN streaming service -- is another sign that a company that many figured would be disrupted is doing the disrupting. At 18 times forward earnings it's also the cheapest of these three stocks. It's time to come home to the House of Mouse.
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Rick Munarriz has positions in Walt Disney. The Motley Fool has positions in and recommends Amazon and Walt Disney. The Motley Fool has a disclosure policy.
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