TDIV tracks the NASDAQ Technology Dividend Index, which has a dividend yield of 2.82. That is well above what investors normally expect of the tech sector and that yield comes by virtue of a mandate that states the index hold at least 20% of its weight in telecom stocks
TDIV’s yield is not excessive, implying room for dividend growth and safety of current payouts because the largest U.S. tech firms also have some of the largest cash hoards and do not have high payout ratios. [Dividend ETFs With Safe Dividends]
The “technology sector had a 6.5% free cash flow yield and a 5.2% earnings yield, both significantly higher than the sector’s 1.5% dividend yield. This spread between dividends compared to free cash flows and earnings suggests that technology companies may have more room to organically support longer term dividend increases, rather than simply distributing excess cash retained over the past several years,” said Issakainen.
First Trust NASDAQ Technology Dividend Index Fund
Tom Lydon’s clients own shares of Apple and DVY.