Verizon will lose its spot in the Dow Jones Industrial Average, but if history is any guide, this may not be bad news for the stock. On June 29, 2026, Google’s parent company Alphabet will replace Verizon, ending Verizon’s 25-year run over 130 years. This move means increased exposure to artificial intelligence, cloud computing, and digital advertising. However, historical stock price trends suggest that investors may be better off buying companies that leave the Dow than companies that join it, a phenomenon commonly known as the “Dow Curse” or “Dow Curse.” Over the last seven moves in the Dow Jones Industrial Average since 2015, five of the evicted stocks outperformed the stocks they replaced in the 12-month measurement period. Most companies also outperformed by quite large margins. Unofficially, what this curse actually means is that after a new company is added to the list of blue-chip stocks that make up the Dow Jones Industrial Average, its stock price begins to significantly underperform compared to the months prior to its inclusion. Verizon stock has risen just 7.5% over the past 12 months, while Alphabet stock has doubled. The Dow Jones Industrial Average rose more than 20% over the same period. Companies added to the index often reflect higher valuations and established growth, which can make them more vulnerable to declining returns after they ultimately agree to join a well-known stock portfolio. Meanwhile, companies’ exits are due to poor performance and declining valuations over the past few years. The most recent shake-up, with Nvidia replacing Intel in 2024, is a notable example. Intel’s exclusion was largely related to the company’s longstanding operational and financial struggles, and Dow’s inclusion of Nvidia at the time was aimed at capturing the AI-centered boom and major changes in the semiconductor industry. However, the data shows that Intel has significantly outperformed its alternatives since the change took effect. FactSet data outlines Intel’s strong stock performance, far outperforming rival Nvidia. So far, Intel has soared about 400% to about $132 per share from $26.20 per share on November 8th. In comparison, NVIDIA has shown more modest growth, rising from $147 per share to around $200 over the same period. While removal from the Dow didn’t necessarily cause Intel’s rebound, the performance nevertheless shows why removal from the index doesn’t necessarily lead to further losses, especially for stocks that are underperforming. What the research says about this Although there is no definitive research paper on the so-called Dow Curse, there are some related studies that document the stock price performance of removed stocks and their replacements. Overall, academic research shows that companies removed from major stock indexes can outperform the stocks they replace in subsequent years. This could potentially mean that investors initially overreact to the removals and enter this period with lower valuations for the removed companies. In a 2008 paper in the Journal of Wealth Management, researchers Anita Arora, Lauren Capp, and Gary Smith tested the first 50 stock alternatives since the Dow expanded to 30 stocks in 1928. They found that being removed from the Dow may not be as bad as its current woes suggest, and that the companies replacing it may not be as bad as their current record indicates. “If investors are not fully aware of this statistical phenomenon, stocks may be too low for the former and too high for the latter. Mistakes are corrected as these companies revert to the mean. Therefore, stocks removed from the Dow may outperform the stocks they replace,” Arora said. I wrote it on paper. Subsequently, a 2013 paper in the Journal of Banking & Finance by Kerryfa Chan, Benton Gup, and Ming-Siun Pan examined the long-term effects of S&P 500 additions and deletions on a sample of stocks from 1962 to 2003, and found that over the long term, stocks that were deleted outperformed those that were added. However, despite these papers on the outperformance of removed stocks, some examples do not fully support the theory and yield less favorable conclusions. A 1995 paper written by Method Beneish and John Gardner in the Journal of Financial and Quantitative Analysis concluded that the prices of companies newly listed on the Dow Jones were unaffected, and that companies removed from the index actually experienced significant price declines. The Dow Jones Industrial Average is a price-weighted index, and companies that persistently hold stocks with low stock prices have only a minor impact on the index. So far, Verizon accounts for only about half of the index due to its low stock price, according to S&P Global. Now that Alphabet is a part of the Dow, if that curse is true, Verizon’s exclusion could mean it once again outperforms its replacements. —With reporting by Nick Wells
