Tech’s lack of representation in traditional dividend ETFs has opened the door for ETFs such as the First Trust NASDAQ Technology Dividend Index Fund (NasdaqGM: TDIV) to gain traction.
TDIV turns two in August and already has more than $400 million in assets. Plus, its trailing 12-month yield of 2.32% is decent by the standards of tech ETFs. Dow components Intel (NasdaqGS: INTC), IBM (NYSE: IBM), Cisco (NasdaqGS: CSCO) and Microsoft (NasdaqGS: MSFT) combine for over 32% of TDIV’s weight. Constituent companies are required to yield at least 0.5% and have paid a dividend in the past year. [Digital Dividends in an ETF]
Some new dividend ETFs are offering increased tech exposure compared to older payout funds. For example, the WisdomTree U.S. Dividend Growth Fund (NasdaqGM: DGRW) features tech as its largest sector weight at 20.2%. Four tech stocks, including Apple, are found among DGRW’s top-10 holdings. [Dividend Growth With ETFs]
DGRW has over $102 million in assets and is up almost 10% since its May 2013 debut. DGRW pays its dividend on a monthly basis.
The First Trust NASDAQ Rising Dividend Achievers ETF (NasdaqGM: RDVY), which debuted in January, has a 24.2% weight to the tech sector. RDVY does not focus on dividend increase streaks, but to be eligible for inclusion in the ETF, a stock’s dividend over the trailing 12 months must be larger “than the dividend paid in the trailing twelve-month period three and five years prior,” according to First Trust.
RDVY also screens for companies with cash/debt ratios in excess of 50% while excluding those firms with payout ratios in excess of 65%.
First Trust NASDAQ Technology Dividend Index Fund
Tom Lydon’s clients own shares of Apple, Cisco, Intel, Microsoft and QQQ.