Verizon joined the Dow Jones Industrial Average in 2004, when AT&T was removed and the index needed a new telecommunications name. It held that seat for 22 years. S&P Dow Jones Indices revealed on June 23 that the seat now belongs to someone else.
Alphabet (GOOGL) will replace Verizon Communications (VZ) in the 30-stock index before the market opens on June 29, CNBC reported. Alphabet’s stock climbed about 1% to around $350 on the announcement. Verizon fell about 2% to around $45.
Why Verizon’s low share price made it a Dow Jones misfit
The Dow is a price-weighted index. A stock’s nominal share price determines how much it moves the benchmark, not its market capitalization. Verizon at around $45 per share accounted for just 0.5% of the Dow’s total weight, a figure S&P Dow Jones Indices cited directly in its announcement.
S&P Dow Jones Indices also said directly that “persistently lower-priced stocks have an immaterial impact on the index.” Verizon at $45 a share was one of those stocks.
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On a day Verizon moved 5%, the Dow would barely notice. A company with an eighth of Alphabet’s share price carries an eighth of its influence in a price-weighted index, regardless of market cap or revenue.
This is the first Dow change since November 2024. The June 29 restructuring also runs alongside Honeywell’s aerospace spin-off. Honeywell Aerospace will not join the index. The parent company, renamed Honeywell Technologies, stays in.
What Verizon’s Dow removal means for VZ shareholders
Verizon’s business does not change because it leaves the Dow. The company still runs the second-largest U.S. wireless network, carries a 6% dividend yield, and is targeting more than $21.5 billion in free cash flow for 2026, its highest since 2020.
CEO Dan Schulman has spent the past year cutting 13,000 jobs and rebuilding the subscriber base after years of customer losses.
The practical market effect runs in the other direction. Funds that passively track the Dow, including the SPDR Dow Jones Industrial Average ETF (DIA), must sell their VZ positions before June 29. That created selling pressure on the stock in the days after the announcement, on top of the 2% drop that came with the news itself.
There is also a perception shift that follows any Dow exit. Verizon spent decades as a default blue-chip name included in the index because it was the kind of company the Dow was designed to represent.
Leaving ends that association. S&P no longer sees Verizon as the right face for the Communications Services sector in its flagship blue-chip index.
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What Alphabet’s Dow Jones entry means for the index and investors
Alphabet was up more than 10% year to date heading into the announcement and on track for its fourth straight winning year. At around $350 per share, it carries roughly eight times more weight in a price-weighted index than Verizon at $45.
S&P cited Alphabet’s portfolio spanning advertising, cloud infrastructure, AI, hardware, autonomous vehicles, and health care technology as the justification for the swap.
As TheStreet noted, the Dow already includes Apple, Microsoft, Amazon, Nvidia, and Salesforce. Adding Alphabet makes six of the 30 Dow components direct mega-cap technology companies, more than at any previous point in the index’s 130-year history.
Investors in Dow-tracking products now hold something closer to a technology-weighted portfolio, with industrials, financials, and health care alongside.
S&P updated the index to reflect where the economy’s largest cash flows are moving. Alphabet fits that description. Verizon, at $45 a share with half a percentage point of weight, had stopped being a meaningful part of how the Dow represents American business.
Whether Verizon investors should be worried after the Dow exit
History offers an interesting counterpoint to the narrative that being dropped from the Dow signals trouble for a stock. CNBC noted that in five of the last seven Dow changes since 2015, the stock that was removed outperformed the stock that replaced it over the following 12 months, a pattern sometimes called the Curse of the Dow.
The logic is mechanical. Forced selling by index funds creates artificial downward pressure on the removed stock. Once that rebalancing is complete, the price often stabilizes or recovers.
The added stock, meanwhile, benefits from forced buying pressure that can inflate its price in the short term and make it harder to outperform going forward.
Verizon is still in the S&P 500. It still pays a growing dividend. GuruFocus noted the stock entered the week with a strong financial strength rating despite the index change.
The Dow removal does not alter any of that. What it does change is the story investors tell about the stock and whether that story still includes the word blue-chip.
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