2 Dow Stocks That Surged in Thursday's Rally

The rally of 2023 continued on Thursday, with the biggest gains seen in the Nasdaq Composite (^IXIC) as more key companies continued to release favorable earnings reports. By comparison, the S&P 500 (^GSPC 1.10%) and Dow Jones Industrial Average (^DJI 0.61%) didn’t have as good a day, but most investors weren’t displeased with further gains for both benchmarks.


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Data source: Yahoo! Finance.

The Dow got its biggest contributions from a pair of companies in very different industries. Oil giant Chevron (CVX 4.86%) announced shareholder-friendly plans for its capital that were both impressive and raised eyebrows among certain market participants. Meanwhile, Salesforce (CRM 5.71%) benefited as the customer relationship-management software company took action to respond to activist investors.

Chevron shareholders get a nice reward

Shares of Chevron were up 5% on Thursday. The energy company doesn’t report its quarterly results until Friday, but that didn’t stop Chevron from announcing its plans to return capital to shareholders in a way that most investors found exciting.

Chevron said late Wednesday that its board of directors had approved moves to share its huge profits with its investors. The board declared a quarterly dividend of $1.51 per share, which was up about 6% from the previously paid dividend. With the increase, 2023 will be the 36th straight year that Chevron has increased its annual payout to shareholders.

In addition, Chevron approved a massive $75 billion share-repurchase authorization. The program, which will take effect on April 1, is a huge upgrade from the previous $25 billion that the oil giant approved four years ago. Moreover, even after today’s share-price gains, the buyback represents more than 20% of Chevron’s current market capitalization.

As much as shareholders liked the moves, some politicians in Washington weren’t pleased at the implication that oil companies have profited immensely from the steep rise in oil prices over the past couple of years. While some would like Chevron to reinvest more of its available capital in new projects, others remain wary of the uncertain regulatory environment and long-term prospects for oil and natural gas exploration and production in the decades ahead.

Salesforce looks for resolution

Meanwhile, shares of Salesforce finished higher by 6%. The software company has been in the news lately as activist investors look for changes, and investors were pleased to see signs that Salesforce might be preparing to respond favorably to their overtures.

Salesforce was the subject of reports from Bloomberg that suggested the CRM software specialist might be looking to appoint new board members. According to the reports, leaders like Mastercard CFO Sachin Mehra and former Carnival CEO Arnold Donald might be candidates to join the Salesforce board as independent directors. In addition, reports speculated that the CEO of San Francisco-based activist investing company ValueAct Capital could also become a board member.

At the same time, fellow activists at Elliott Investment Management are looking to nominate their own slate of directors to Salesforce’s board, setting the stage for a potential proxy fight. Elliott believes that Salesforce has a lot more room to boost profits through cost-cutting measures and other actions.

Shareholders in Salesforce seem equally happy with either potential outcome, at this point. Whether Salesforce takes action itself or has change imposed upon it by Elliott, investors could stand to benefit — and that’s sending the stock higher.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Mastercard and Salesforce. The Motley Fool recommends Carnival Corp. The Motley Fool has a disclosure policy.