What are the magnificent 7 stocks contributions to the S&P 500?
The seven megacap stocks — Microsoft (MSFT), Apple (AAPL), Nvidia (NVDA), Alphabet (GOOG), Amazon.com (AMZN), Meta (META) and Tesla (TSLA) — account for 29.7% of the S&P 500 as of April 17, says Datatrek Research. That's up from the group's 27.9% weight in the S&P 500 in 2023.
The “Magnificent Seven” might sound like the title of an old Western film or what a large family might name its group chat, but in finance the moniker is being used to describe a group of high-performing tech stocks: Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta and Tesla.
Catch up fast: The Magnificent Seven are Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla, and Meta. The ranks of the top 10 include Berkshire Hathaway, Eli Lilly and chipmaker Broadcom.
Seven stocks – Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla – accounted for roughly 60pc of the US stock market's 26.3pc return in 2023.
- Microsoft.
- Apple.
- Nvidia.
- Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL)
- Amazon (NASDAQ: AMZN)
- Meta Platforms (NASDAQ: META)
- Tesla.
The key takeaway is that these stocks make up about 30% of the S&P 500's total weighting, although they make up just 1.6% of the stocks in the index. And because their performance has been incredibly strong, they have made the overall index's performance far better than it otherwise would have been.
The leading dividend payers might come as a surprise. Tech titans Microsoft (NASDAQ: MSFT) and Apple (NASDAQ: AAPL) led the way in dividend payments last year. They're part of the much-lauded "Magnificent Seven" stocks, which are more known for their ability to deliver outsize stock price appreciation than income.
The Magnificent 7 refers to the seven most influential stocks in the S&P 500 index. These stocks, including NVIDIA NVDA +1.5% , Meta Platforms, Tesla TSLA +2.1% , Amazon AMZN -1.5% , Alphabet, Microsoft MSFT -1.4% , and Apple AAPL +0.7% , have dominated the market, driving significant gains in the major indexes.
| Effective Date | Index Name | Company Name |
|---|---|---|
| Mar. 18, 2024 | S&P 500 | Deckers Outdoor |
| Mar. 18, 2024 | S&P 500 | Whirlpool |
| Mar. 18, 2024 | S&P 500 | Zions Bancorporation |
| Mar. 18, 2024 | S&P 100 | Intuit |
For those out of the loop, the “Magnificent 7” stocks — Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), Meta (META), Microsoft (MSFT), Nvidia (NVDA) and Tesla (TSLA) — drove the S&P 500 in 2023 and account for about half of the weighting of the Nasdaq index.
What is the Big 7 investment?
The group is made up of mega-cap stocks Apple (AAPL), Alphabet (GOOGL), Microsoft (MSFT), Amazon.com (AMZN), Meta Platforms (META), Tesla (TSLA) and Nvidia (NVDA). In 2023, the Magnificent 7 stocks logged an impressive average return of 111%, compared to a 24% return for the broader S&P 500.
We saw in the previous section that investing in the S&P 500 has historically allowed investors to double their money about every six or seven years. Your initial $1,000 investment will grow to $2,000 by year 7, $4,000 by year 14, and $6,000 by year 18.
The magnificent 7 stocks — Tesla TSLA, Meta Platforms META, Alphabet GOOGL, Microsoft MSFT, Amazon.com AMZN, Apple AAPL and NVIDIA NVDA — are set to report their quarterly results in a few days.
- Nvidia. Nvidia (NASDAQ: NVDA) sells the world's top-performing artificial intelligence (AI) chip, the H100 graphics processing unit (GPU) that powers crucial operations such as the training and inference of AI models. ...
- Amazon.
- Microsoft.
- Apple.
- Nvidia.
- Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL)
- Amazon (NASDAQ: AMZN)
- Meta Platforms (NASDAQ: META)
- Tesla.
- Cisco Systems Inc. (ticker: CSCO)
- Comcast Corp. (CMCSA)
- Telus Corp. (TU)
- Unilever PLC (UL)
- Sony Group Corp. (SONY)
- Toronto-Dominion Bank (TD)
- Solventum Corp. (SOLV)
- Essential Utilities Inc. (WTRG)
| Index fund | Minimum investment | Expense ratio |
|---|---|---|
| Schwab S&P 500 Index Fund (SWPPX) | No minimum. | 0.02%. |
| Fidelity 500 Index Fund (FXAIX) | No minimum. | 0.015%. |
| Fidelity Zero Large Cap Index (FNILX) | No minimum. | 0.0%. |
| T. Rowe Price Equity Index 500 Fund (PREIX) | $2,500. | 0.20%. |
SPY, VOO and IVV are among the most popular S&P 500 ETFs. These three S&P 500 ETFs are quite similar, but may sometimes diverge in terms of costs or daily returns.
In contrast, every other component of the “Magnificent Seven” has a market cap of over $1 trillion, with AAPL and MSFT both hovering around $3 trillion.
- Verizon Communications VZ.
- Johnson & Johnson JNJ.
- Philip Morris International PM.
- Altria Group MO.
- Comcast CMCSA.
- Medtronic MDT.
- Pioneer Natural Resources PXD.
- Duke Energy DUK.
Which stock pays the highest dividend?
| Company | Dividend Yield |
|---|---|
| Franklin BSP Realty Trust Inc. (FBRT) | 11.60% |
| Angel Oak Mortgage REIT Inc (AOMR) | 11.58% |
| Altria Group Inc. (MO) | 9.79% |
| Washington Trust Bancorp, Inc. (WASH) | 9.16% |
- ARMOUR Residential REIT – 20.7%
- Orchid Island Capital – 17.8%
- AGNC Investment – 14.8%
- Oxford Square Capital – 13.7%
- Ellington Residential Mortgage REIT – 13.2%
- SLR Investment – 11.5%
- PennantPark Floating Rate Capital – 10%
- Main Street Capital – 7%
Magnificent Seven Stocks Aren't Overvalued—Cyclicals Are, J.P. Morgan Says. The Magnificent Seven stocks are raking in returns this year, but their valuations don't look stretched, J.P. Morgan argued on Monday.
| Stock | 2024 return through March 31 |
|---|---|
| Arcutis Biotherapeutics Inc. (ARQT) | 206.8% |
| Janux Therapeutics Inc. (JANX) | 250.9% |
| Trump Media & Technology Group Corp. (DJT) | 254.1% |
| Super Micro Computer Inc. (SMCI) | 255.3% |
Sector outlook: Technology (27%), natural resources and energy (19%), and healthcare and biotech (10%) represent the sectors investors are most bullish about for 2024.
