Tech ETFs are Credible Dividend Plays

For years, technology was the not first sector investors thought of when they thought of dividends. The largest sector weight in the S&P 500 is changing that and that change has been a boon for an array of exchange traded funds. In fact, in dollar terms, technology is now the largest dividend-paying sector in the U.S.

Apple, Microsoft, IBM, Qualcomm and Cisco combine for among the dividend payers found in the Technology Select Sector SPDR (NYSEArca: XLK) and the Vanguard Information Technology Index ETF (NYSEArca: VGT). There is room for more tech dividend growth. There are 257 tech names in the S&P 500, but less than 50% pay dividends, by far the lowest percentage of the 10 sectors tracked by the index, according to CNBC data.

SEE MORE: 46 Tech ETFs to Tap Into Big Growth Names

Exchange traded fund investors who are interested in tapping into the big growth names from the technology space have a number of broad and focused sector-specific ETF options to choose from. Among the sector SPDR ETFs, XLK is the third-best performer this year.

“Tech companies like Apple (AAPL), Microsoft (MSFT) and Cisco (CSCO), are drowning in cash (30% of Cisco’s market cap value is in cash). Their business models are not capital intensive. Their balance sheets are also not saturated with debt. Pension obligations and the burdens of the “old economy” are non-existent. Only so much can be reinvested into Research and Development. What to do with all of this cash,” according to a Point View Wealth Management note posted by Amey Stone of Barron’s.