Can the 8 Worst-Performing Dow Jones Stocks in 2024 Beat the S&P 500 in 2025?

2024 was an excellent year for the major stock market indexes. But the Dow Jones Industrial Average (DJINDICES: ^DJI) had just a 12.9% return, compared to 23.3% for the S&P 500 (SNPINDEX: ^GSPC) and 28.6% for the Nasdaq Composite.

Eight of the 30 Dow components lost value in 2024. And although those companies are from completely different industries, they are all similar in that they're dividend-paying value stocks.

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Here's a quick look at each company, to help you determine which dividend stocks stand out as the best buys right now.

Image source: Getty Images.

Turnaround candidates

A late-year rally in Boeing (NYSE: BA) wasn't quite enough to climb past Nike (NYSE: NKE), making the aircraft maker the worst-performing Dow stock in 2024:

^IXIC data by YCharts.

Nike's multi-decade moat in shoes and athletic apparel is under threat. Competitors have captured sales and margin growth, while Nike has struggled to identify buyer behavior trends. Its sales growth has stalled and its margins are down, as the transition from wholesale distribution to a blend of wholesale and direct-to-consumer has been unsuccessful.

Not counting the brief stock-market sell-off induced by COVID-19 in March 2020, Nike is at its lowest level in eight years. The good news is that expectations are low, and the stock could rally if the business improves. But Nike operates in a cyclical industry and is heavily exposed to international markets, including China. So investors should only consider the stock if they believe in the brand's long-term growth, and are willing to hold through periods of volatility. Nike has a decent dividend yield of 2.1%, which provides an incentive to wait and give the company time to recover.

Boeing has been underperforming the industrial sector for years. The COVID pandemic drastically impacted its business model. There were also issues with the release of the 737 MAX. Then came supply chain challenges and inflation. Early last year, a door plug blew out on a 737 MAX while in flight, opening a new wave of safety concerns for the company. Throw in a down year for Boeing's Defense, Space, & Security business, and it's easy to see why the stock was such a poor performer last year and is down 50% over the last five years.

Like Nike, Boeing now has a new CEO, and expectations are low, so it wouldn't take much for the stock to turn around. Investors got some good news in December when the company received a large order for 737 MAX airplanes, but it will take a lot more to restore faith in Boeing's lineup and ability to innovate.

Boeing cut its dividend during the onset of the pandemic and hasn't reinstated it since, making it a pure-play turnaround candidate with no passive-income potential at this time.

A beaten-down sector chock-full of high-yield stocks

The healthcare sector has become a larger share of the broader market, and now makes up around 10% of the S&P 500. Similarly, big-name healthcare stocks Amgen (NASDAQ: AMGN), Merck (NYSE: MRK), Johnson & Johnson (NYSE: JNJ), and UnitedHealth Group (NYSE: UNH) play a critical role in the Dow, making up a combined 14.6% of the index.

The healthcare sector sold off heavily in the final three months of 2024, making Dow healthcare stocks some of the poorest-performing components in the index.

But all four stocks could beat the S&P 500 if investors gravitate toward value and away from growth stocks in 2025. The valuations of all four companies have fallen to attractive levels based on forward earnings guidance.

UNH PE Ratio (Forward) data by YCharts.

Amgen has increased its dividend for 12 straight years and currently yields 3.5%. Clinical trials for its weight loss drug are going well, which could become a big catalyst for the stock.

Merck is a massive pharmaceutical company with reliable earnings, dividend growth, and a current yield of 3.2%. But it's facing increased competition, which has pressured the company to grow its product pipeline. Merck is one of the best value stocks in the healthcare sector for folks who are confident that its innovation will pay off.

J&J's growth has been fairly disappointing lately, but it's still generating gobs of free cash flow, has over 60 consecutive years of dividend increases, and currently has a high yield of 3.4%.

UnitedHealth is an insurance provider that has been a massive long-term winner, increasing by more than 400% over the last decade. The company's market cap has ballooned to a half-trillion dollars, making it the second most valuable U.S.-based healthcare company behind Eli Lilly.

The stock got pummeled in December due to controversy about the murder of then-CEO Brian Thompson, as well as regulatory concerns. UnitedHealth is the most expensive of the four Dow healthcare stocks, and it has the lowest current yield of the group at 1.6%.

UnitedHealth had been recovering at the start of the year, but fell 6% on Jan. 16 in response to its earnings results. However, the stock could quickly rebound if new management can quell investor concerns.

Dividend stocks you can count on to keep boosting their payouts

McDonald's (NYSE: MCD) finished 2023 at around an all-time high. With the valuation stretched heading into 2024, a pullback wasn't too surprising. However, McDonald's remains an excellent dividend stock to buy and hold over the long term.

McDonald's franchise business model makes it highly resistant to recessions. Since around 95% of McDonald's restaurants are franchised, the company makes most of its money from royalties on food items and rent, rather than from sales.

With 48 years of consecutive dividend increases and a 2.5% yield, McDonald's stands out as an ultrareliable dividend stock to buy in 2025 and hold long-term.

Chevron (NYSE: CVX) is another rock-solid dividend stock to buy now. Despite operating in the cyclical and sometimes volatile oil and gas industry, Chevron has 37 consecutive years of dividend increases and a sizable yield of 4.1%. So right off the bat, it stands out as a powerful choice for passive income generation.

Chevron can raise its dividend no matter the market cycle, thanks to its geographically diverse business and exposure to different aspects of the oil and gas value chain -- not just exploration and production.

Chevron is off to a roaring start in 2025, with an 8.3% year-to-date gain at this writing. That makes Chevron the best-performing Dow stock so far this year.

Eight dividend stocks to consider now

Buying quality dividend-paying companies on sale is an excellent way to fuel your passive income stream while participating in the stock market. But no one knows what the market or the eight stocks on this list will do in the near term.

So instead of trying to time the market by outperforming the benchmark in 2025, it's better to focus on the companies that you're most interested in and that best fit your portfolio.

Boeing and Nike are compelling turnaround plays. Healthcare stocks Johnson & Johnson, Merck, Amgen, and UnitedHealth have a balance of income and value. And Chevron and McDonald's are two industry-leading businesses with long track records of increasing the dividends they return to shareholders.

Add it all up, and you can see that all eight stocks are worth a closer look in 2025.

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Daniel Foelber has positions in Nike. The Motley Fool has positions in and recommends Chevron, Merck, and Nike. The Motley Fool recommends Amgen, Johnson & Johnson, and UnitedHealth Group. The Motley Fool has a disclosure policy.