Apple’s Ascent in Dividend ETFs

Apple (NasdaqGS: AAPL), the world’s largest company by market value, is joining the Dow Jones Industrial Average and the SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) later this month.

The addition of Apple to the Dow ensures that all 30 of the index’s members are dividend payers. DIA is one of a small number of equity-based exchange traded funds that pays a monthly dividend. Though still new to the dividend world, Apple is becoming a larger holding in some payout ETFs. [Monthly Dividend ETFs]

“You might also be surprised to find Apple as a top-10 holding in 12 dividend focused ETFs,” said S&P Capital IQ in a new research note. “Apple began paying dividends in 2012, raised its dividend mostly recently in April 2014, and now offers a 1.5% dividend yield — below the S&P 500 index.”

The WisdomTree U.S. Dividend Growth Fund (NasdaqGM: DGRW) is a prime example of a dividend ETF that was quick to include Apple despite the company’s short dividend track record. DGRW features an almost 19.6% weight to technology, one of the largest weights to that sector among dividend ETFs. The fund’s Apple weight is 4.3%, making the iPhone maker the ETF’s second-largest holding.

DGRW debuted just a year after Apple reinstated its dividend, but the ETF’s index methodology Apple’s fast entry into the fund.

“Apple is now the second-largest dividend payer in the United States. And with the record earnings the company just reported, it could easily move up to first place soon. But if your ETF uses backward-looking screens, as most do, you likely won’t see Apple in your portfolio until 2023 (at the earliest),” said WisdomTree in a note out last week. [Apple and Dividend ETFs]

DGRW, which has $428.4 million in assets under management, has a distribution yield of 2.51% and pays a monthly dividend. Importantly, Apple has $178 billion in cash, more than the market values of all but a few S&P 500 members, with which to support future shareholder rewards.