The Dow Jones Industrial Average is known for containing 30 industry-leading stocks from various stock market sectors. But even Dow stocks can survive severe sell-offs.

Dow Components Salesforce (CRM 1.37%), Chevron (CVX 0.35%)And Home Depot (HD 0.09%) are between 12% and 24% below their 52-week highs and are all down year-to-date, despite gains in broader indices such as the Dow, S&P500And Nasdaq-Composite.

For this reason, all three dividend stocks are a solid buy recommendation for patient investors.

Image source: Getty Images.

Salesforce is a balanced purchase

It may have surprised investors when Salesforce – a growth stock – was added to the Dow Jones in August 2020. At the time, Salesforce was inconsistently profitable and did not pay a dividend. But Salesforce has matured greatly as a company in recent years. Today, it no longer focuses solely on revenue and reinvests everything back into the business. The company is highly profitable, announced its first quarterly dividend earlier this year, and is buying back its own shares en masse.

Companies like Salesforce reward their employees with stock-based compensation, which can dilute the ownership of existing shareholders. Over the past decade, the number of Salesforce shares outstanding has increased by 54%. However, in recent years, the company has been buying back shares to offset the stock-based compensation, reducing its share count by 1% over the past three years.

Salesforce has taken a leaf out of MicrosoftMicrosoft paid a record $10.7 billion in stock-based compensation over the past 12 months — a 123% increase in five years. But at the same time, the company managed to reduce the number of shares outstanding by 2.6% during that time thanks to buybacks. To pull off this kind of strategy, the company must already be very profitable. But if done right, it can help companies recruit and retain top talent without diluting shareholders.

Salesforce stands out as one of the most balanced tech stocks. Its dividend yield is just 0.7% — but the company has only just started paying dividends. Its price-to-earnings (P/E) ratio is just 24.5 — suggesting Salesforce is relatively cheap compared to its historical valuation. The biggest warning sign with Salesforce is that growth has slowed and the company hasn’t done a good job of monetizing artificial intelligence. However, it would be a mistake to overlook Salesforce’s industry-leading position and runway for long-term growth in the enterprise software space.

There are plenty of other tech stocks that are in demand – but many of them have high prices. Salesforce is a good buy if you’re looking for a more reasonable valuation and a company that isn’t going full throttle on growth, but is more focused on profitability and returning capital to shareholders through buybacks and dividends.

Chevron remains a top choice in the oil sector

Despite strong results, Chevron is stagnating at a 52-week low. Oil prices are partly to blame for this.

Prices for West Texas Intermediate (WTI) crude oil – the US benchmark – have been above $75 a barrel for most of the year. Recently, however, oil prices have fallen and WTI prices are now below that mark.

WTI crude oil spot price data from YCharts

Chevron’s closest competitor – ExxonMobil — is up nicely year-over-year and is only about 5% below its all-time high. Although ExxonMobil and Chevron are similar companies, there are some notable differences, particularly in their merger and acquisition activity.

While Exxon completed the acquisition of Pioneer Natural Resources in May, Chevron has not yet made any progress in acquiring HessTen months have passed since Chevron first announced its $53 billion acquisition of the exploration and production company, but the plan faces a number of obstacles.

Although Chevron is not currently doing as well as Exxon, it is still a particularly attractive buy. Continued dividend increases coupled with a sell-off in the stock have pushed Chevron’s yield up to 4.6%. Over the past two years, Chevron has returned $50 billion to shareholders through dividends and share buybacks – demonstrating the extent of its above-average earnings.

Chevron can fund its operations and dividend even when oil is at $50 per barrel, giving the company a nice margin of error compared to current oil prices. All in all, Chevron is a quality dividend stock to buy now.

Home Depot may emerge stronger from an industry-wide downturn

Home Depot has been more or less flat year-over-year for a number of reasons that are entirely valid. First, Home Depot’s growth has stalled. The company is sensitive to ups and downs in the overall economy. So far this earnings season, several companies have indicated that consumers remain picky about their spending, especially on nonessential goods.

Home Depot benefits from a strong economy and a buoyant housing market. Lower interest rates are great news for Home Depot because they mean lower borrowing costs, lower mortgage rates, and cheaper financing for home improvement projects. Unfortunately, that’s not the environment we find ourselves in today.

However, there are gradations in cyclical companies. Some companies experience a real boom or bust due to economic factors or commodity prices, for example. With Home Depot, on the other hand, it is more likely that there is either a boom or a stagnation.

Over the past decade, Home Depot’s revenue has nearly doubled and diluted earnings per share have more than tripled. However, in recent years, Home Depot’s earnings and revenue have declined slightly.

HD Sales (TTM) data from YCharts

While Home Depot’s performance may continue to disappoint in the near term, there’s no reason to believe that its underlying investment thesis has changed. Earlier this year, Home Depot made a massive $18 billion acquisition because it had the liquidity to invest regardless of the market cycle. It’s also worth noting that Home Depot’s dividend is affordable, with the company’s payout ratio at a healthy 57%.

With a P/E ratio of 23.2 and a yield of 2.5%, Home Depot is a balanced, industry-leading company worth buying now.

Zoom out and think long term

Salesforce, Chevron, and Home Depot may be in completely different industries, but all three companies are similar in that they are growing at a slower rate or (in the case of Home Depot) even experiencing declining growth.

Short-term investors may be quick to pass over all three companies, but long-term investors tend to focus on where a company will be in a few years rather than where it is today. Salesforce, Chevron and Home Depot show no signs of losing their industry-leading positions, so all three stocks are worth considering now.