Technology usually isn’t the first sector retirees think of as this demographic usually looks for more docile fare. Yet conservative investors may want to evaluate the sector’s dividend dependability. That theme is accessible with the ProShares S&P Technology Dividend Aristocrats ETF (CBOE: TDV).
TDV follows the S&P Technology Dividend Aristocrats, which requires member firms to have payout increase streaks of at least seven years. Its 34 holdings are equally weighted, a strategy that helps reduce single-stock risk.
For risk-averse investors, TDV takes some of the volatility out of the tech sector while providing higher levels of income than what are usually associated with this sector.
“Some investors are attracted to the return potential of investing in technology. But many early-stage companies are focused on emerging tech and rapid growth, which can lead to overvaluation and high volatility. Well-established technology-related companies, on the other hand, have typically changed how they allocate capital. They often demonstrate commitment to shareholders through dividends,” according to ProShares research.
To TDV for Tidy Payouts
Indeed, there is some maturity on TDV’s roster as nearly 30 of its components top the minimum seven-year dividend increase streak requirement. Three have pay increase streaks spanning more than two decades.
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. In fact, in dollar terms, technology is now the largest dividend-paying sector in the United States.
“ProShares S&P Technology Dividend Aristocrats ETF (TDV) is the only ETF focusing on the well-established companies of the S&P Technology Dividend Aristocrats—quality names that have consistently raised their dividends for at least seven consecutive years. As a group, they have had hallmarks of quality like stable earnings, solid fundamentals, and often strong histories of profit and growth,” notes the issuer.
While yields are low across many sectors, including tech, TDV is relevant for income investors because it’s home to a group of companies with large cash stockpiles that can sustain and grow payouts.
TDV “may may also include technology-related companies in the communication services and consumer discretionary sectors, which may cover internet direct marketing retail, interactive home entertainment, and interactive media and services,” concludes ProShares.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.