General Electric was the last original member of the Dow Jones Industrial, and on June 19, 2018 after more than a century, it was replaced by Walgreens Boots Alliance Drug Store Chain.
The company has not been performing well and has seen a 55% drop in price over the last 2 years, 30% of that which happened in the first quarter of 2018. This is all in spite of the fact that the DOW as a whole has risen by 15% in the past year.
The removal of G.E., which will formally occur June 26, reflects a shift in the economic composition of the United States, which long ago tilted away from heavy industry and toward services, such as technology, finance and health care.
This is a major milestone seeing as how General Electric (GE) was one of the original members of the index from back when the stock market measure was introduced in 1896.
In a recent media blurb explaining the change, David Blitzer, managing director and chairman of the index committee at S&P Dow Jones stated, “Consumer, finance, health care and technology companies are more prominent today and the relative importance of industrial companies is less.”
This statement also gives a slight explanation as to one of the many reasons behind GE being replaced by healthcare giant, Walgreens. With rumors of the giant working with companies like Amazon to help them break into the pharmaceutical industry in the future, the dividend potential for the Walgreens Boots Alliance shareholders is looking extremely bright at this point.
In it’s early stages GE could be viewed as the equivalent to a modern day technology stock. As the result of a merger between Thomas Edison’s electrical company and GE itself, it was a representation of the progression towards the innovation of the manufacturing, electricity, and steel industries.
Seeing as how now the modern day version of technology, is ACTUAL technology there is no surprise that the industrial giant has been underperforming for shareholders.
Alphabet, Amazon, Apple, Facebook and Microsoft are the five most valuable companies in the United States today, but just 18 years ago in 1990 General Electric was noted as America’s most valuable company.
After the official removal of General Electric from the Down Industrial Index on June 26th, the longest standing company on the DOW will be EXXON Mobil.