XSD, the equal-weight semiconductor ETF, has its own advantages applicable to rising rates environments. For example, the ETF does have exposure cash-rich large-cap chipmakers, several of which have been recent dividend growers. Dividend growth stocks are, historically, excellent rising rates and inflation fighters. [Dividend ETFs for Rising Rates Protection]
With its recent dividend increase, Qualcomm (NasdaqGS: QCOM) has more than doubled its quarterly dividend in just three years. Broadcom’s (NasdaqGS: BRCM) payout is up 40% in three years. Texas Instruments (NasdaqGS: TXN) has doubled its payout in three years. Broadcom and Texas Instruments combine for 4.7% of XSD’s weight.
When rates surged in 2013, XSD climbed 34.1%, more than double the returns offered by XLU.
“The impetus for an increase in rates is due to a strengthening economy and as one would expect in an economic expansion cyclicals should out pace defensives as the economy picks up steam,” said Mazza.
SPDR Morgan Stanley Technology ETF
Tom Lydon’s clients own shares of Apple and Cisco.
