While you could buy individual (or fractional) shares of all other 29 components of the Dow, a far simpler approach would be to invest in a Dow exchange-traded fund (ETF) like the SPDR Dow Jones Industrial Average ETF Trust (NYSEMKT: DIA). The ETF charges a 0.16% expense ratio and has a respectable $37.7 billion in net assets. Because the Dow is a price-weighted index, Nvidia is a relatively small holding, making up just 2.1% of the index. So investing $1,000 in the SPDR Dow Jones Industrial Average ETF Trust basically means putting $979 in the other 29 components and $21 in Nvidia.

The Dow is a solid choice for folks looking for more value and income than the other index. The SPDR Dow Jones Industrial Average ETF Trust has a 26.2 P/E ratio and a 1.7% yield. This is a better value and offers more passive income than the 29.8 P/E ratio and 1.3% yield from the Vanguard S&P 500 ETF or the 41.2 P/E ratio and 0.6% yield from the Invesco QQQ Trust — which tracks the performance of the Nasdaq-100 (the 100 largest components in the Nasdaq Composite, excluding financial stocks).

In just a couple of years, Nvidia went from a notable tech stock to the most valuable company in the world — disrupting the balance of the S&P 500, the Nasdaq Composite, and now the Dow Jones Industrial Average. This is great news for investors who are bullish on Nvidia, but not for folks who believe Nvidia is overvalued.

Since Nvidia makes up so little of the Dow, buying a Dow ETF is still a great way to get exposure to top companies without allocating too much to Nvidia. Other low-cost ETF ideas that may be worth a look if you’re interested in more income and value are the Vanguard Value ETF, the Vanguard Mega Cap Value ETF, and the Vanguard High Dividend Yield ETF.

Nvidia is arguably the most unique company we’ve seen in decades because it has run up so fast, and yet, earnings are driving the narrative. In past years, we’ve seen exciting companies packed with potential produce outsized gains. The investment case for these companies rested on the expectation of quick revenue expansion and future profits. Nvidia, on the other hand, is delivering truly remarkable earnings growth right before our eyes, and doing so in a big way.

In its recent quarter, Nvidia delivered a record net income of $19.3 billion. For context, Microsoft‘s recent quarter saw $24.7 billion in net income.

Nvidia is one of the most profitable companies in the world, and it is also growing faster than all of its mega-cap tech peers. Until that changes, Nvidia will likely continue rewarding its investors. But that doesn’t mean you have to buy the stock if it doesn’t suit your risk tolerance.

Before you buy stock in Nvidia, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $829,378!*

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*Stock Advisor returns as of November 25, 2024

Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel, Microsoft, Nvidia, Vanguard Index Funds-Vanguard Value ETF, Vanguard S&P 500 ETF, and Vanguard Whitehall Funds-Vanguard High Dividend Yield ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft, short February 2025 $27 calls on Intel, and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Better Buy Now: Nvidia or the Other 29 Stocks in the Dow Jones Industrial Average? was originally published by The Motley Fool