Updated Nov. 2, 2016 12:27 p.m. ET
Five stocks are responsible for 81% of the gains in the Dow Jones Industrial Average so far this year.
UnitedHealth Group Inc., Caterpillar Inc., International Business Machines Corp.,Chevron Corp. and 3M Co. have each contributed more than 100 points to the Dow Jones Industrial Average’s 717-point gain in 2016 through the end of October, according to WSJ Market Data Group.
There is no similar cluster at the bottom end of the index—not a single stock took more than 85 points off the Dow industrials.
Last year, the five worst-performing companies took off more than 780 points from the Dow industrials, offset by the five biggest contributors, which added 757 points to the index. (The index finished 2015 down 398 points, or 2.2%.) Wal-Mart Stores Inc., AppleInc. and Caterpillar were the biggest decliners that year.
“That’s the magic of stock picking,” said Nicholas Colas, chief market strategist at global brokerage Convergex. While there are often outsize winners in the index, the problem is “you just rarely know which they’re going to be in any given year.”
One reason for those five stocks’ gains this year: a scramble by investors for securities that generate income. The five companies have an average annual dividend of about 3.2%, according to FactSet. That is slightly below the average 3.6% dividend yield for the S&P 500 utilities sector, which has rallied this year as investors sought income while bond yields were low. The average dividend yield for the broader S&P 500 is 2.2%.
Mr. Colas said the lack of impact by Apple’s stock on the Dow may surprise some investors. Apple replaced telecommunications giant AT&T Inc. in the Dow industrials on March 19, 2015. Apple’s stock is up 5.5% in 2016, more than the broader market, but it has contributed only 57 points to the index.
It has, however, been a top contributor to the S&P 500, which is weighted by market capitalization rather than stock price like the Dow industrials. Apple has the highest market cap in the U.S., meaning even small shifts in its stock price have a big impact on the S&P 500.
The S&P 500 has gained 82.21 points or 4% in 2016 through October, with the biggest contributions coming from Facebook, which added 5.09 points; Johnson & Johnson, 3.9 points; and Apple, 3.83 points, according to S&P Dow Jones Indices.
In another twist, this year’s worst-performing sector in the S&P 500, health care, includes the Dow industrials’ biggest point contributor.
Shares of U.S. health insurer UnitedHealth have risen 20% this year as of Monday’s close and added 162 points to the Dow industrials in 2016, even as the broader S&P 500 health-care sector fell 7% in the same period.
Investors wondering which stocks could swing the Dow industrials in the last two months of the year should look to the companies with the biggest weighting, Mr. Colas says. In addition to 3M, IBM and UnitedHealth, that includes Goldman Sachs Group Inc., which has a roughly 6.7% weighting, and Boeing Co., with a roughly 5.4% weighting, he said.
So far this year, those latter two stocks haven’t moved the index much. Both are roughly flat, each taking nearly 15 points off the index through the end of October.