ETFs to Watch as Microsoft Raises Its Dividend by 10%

Covid-19 threw a wrench in a lot of dividend plans for companies this year, but some have been able to thrive amid the pandemic, such as Microsoft. As announced on their company website, the software giant said it would be raising its dividend by 10%, which should put Microsoft-heavy exchange-traded funds (ETFs) in focus.

“Microsoft Corp. announced it will raise its dividend about 10% Tuesday, to 56 cents a share from 51 cents a share. Microsoft shares were up about 0.5% in after-hours trading following the announcement,” a MarketWatch report stated. “The stock received a bigger boost last week, when Morgan Stanley analyst Keith Weiss predicted the tech giant would increase its dividend by 10% or more in the coming days to push its implied dividend yield back above 1%. Microsoft also disclosed that it will hold a virtual annual shareholders meeting on Dec. 2. Microsoft shares closed with a 1.6% gain in Tuesday’s regular session at $208.78, giving it a market capitalization of $1.55 trillion. Shares have returned 33.4% so far in 2020, while the S&P 500 index has returned 6.2%.”

MSFT Chart

MSFT data by YCharts

ETFs with Microsoft exposure include the Fidelity MSCI Information Technology Index ETF (FTEC). FTEC tries to reflect the performance of the Nasdaq-100 Technology Sector Index, which consists of companies in the Nasdaq-100 Index classified as technology according to the Industry Classification Benchmark.

In addition, here are three other funds to look at with the heaviest Microsoft weightings:

  1. Technology Select Sector SPDR ETF (NYSEArca: XLK): tries to reflect the performance of the Technology Select Sector Index, which is comprised of technology and telecom sector of the S&P 500. The ETF includes companies from technology hardware, storage, and peripherals; software; diversified telecommunication services; communications equipment; semiconductors and semiconductor equipment; internet software and services; IT services; electronic equipment, instruments and components; and wireless telecommunication services.
  2. iShares U.S. Technology ETF (NYSEArca: IYW): reflects the performance of the Dow Jones U.S. Information Technology Index, which includes all tech sector picks in the Dow Jones U.S. Index. Due to the Dow Jones’ classification of information tech names, healthcare technology stocks may be included while payment technology stocks are excluded.
  3. iShares Evolved US Technology ETF (BATS: IETC): seeks to provide access to U.S. companies with technology exposure, as classified using a proprietary classification system. It will hold common stock of those companies that fall into the Technology Evolved Sector which have economic characteristics that have been historically correlated with companies traditionally defined as technology companies.

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