Apple, Inc., the world's biggest company in terms of market value ($736 billion), will join the 119-year-old Dow Jones Industrial Average. A stock split by Visa Inc. on the Dow will allow the technology giant to replace the telecom giant AT&T on March 19.
Besides having the biggest market value in the world, in January Apple reported a net income of $18 billion during the previous quarter. Booming sales of iPhones powered the company's all-time biggest quarterly profit.
The Dow's index committee chooses component stocks. Meanwhile, the wait for Apple investors and customers for the company to join the Dow has been long, with some questioning why Apple had not been added sooner.
However, the delay was likely to Apple's shares being traded over $600 in 2014. The 7-for-1 split dropped the price closer to those of the present Dow components, according to Forbes.
Apple is already a popular stock among institutional investors and institutions. Dow will now be more valuable for retail clients that invest in the technological leader.
Wayne Lin, one of QA Investors' portfolio managers, noted that adding Apple to the Dow symbolizes the extent that technology has "permeated our everyday lives." Over the last decade, Apple's stock shares have posted yearly total returns of 36%, according to Wall Street Journal.
However, it is improbable that adding Apple to the Dow will result in a quick change in the activities of investors. In fact, it could make Dow companies, which tend to be less fluctuating than Apple, a little more vulnerable.
Apple already carries the NASDAQ's biggest weight, at 10 percent; and the S&P 500's largest weight, at 4 percent. Projections put Apple at a 4.66 weighting on the Dow.