Traditionally, tech companies have not considered paying back their investors. Instead, many firms opted to reinvest cash back into the company or buy back stocks. However, times are changing, and the technology sector of the S&P 500 is now among the top dividend issuers. Technology companies began to compensate shareholders during the financial crisis, and the habit stuck.
ETF investors can also utilize the First Trust NASDAQ Technology Dividend Index Fund (NasdaqGS: TDIV) to focus on some of the top dividend payers in the tech space. TDIV has a 2.65% 12-month yield.
TDIV includes some criteria for inclusion to make sure tech companies meet the dividend cut. For instance, the ETF only includes companies with at least a 0.5% yield and those that have not cut dividends per share paid within the past year.
“When looking for income in this low yield world, you should not focus entirely on the stated yield, but also the commitment management has made to the dividend, the balance sheet to support the dividend, and the payout ratio to provide more room to grow the dividend. The high flying tech stocks of yesteryear are the income darlings of today,” adds Point View Wealth Management in the note posted by Barron’s.