Technology Dividend ETF Gets Earnings Season Boost
Earnings season in the technology space received a welcome surprise from Intel Corporation (NASDAQ: INTC) this week, which reported better-than-expected revenue and gross profit.
The semiconductor behemoth pays a healthy three-percent yield and just recently hit new 52-week highs on the expectations for future growth in its core processor business.
Two other technology dividend giants, Apple Computer (NASDAQ: AAPL) and IBM (NYSE: IBM), also just recently announced a new partnership designed to cross-promote core business initiatives. Apple and IBM will co-develop new applications for business users, as well as offer IBM clients access to Apple's consumer products suite.
One ETF that is set to benefit from both of these announcements is the First Trust Technology Dividend ETF (NASAQ: TDIV). This fundamentally weighted ETF tracks approximately 90 stocks in the technology and telecommunications sector that are focused on returning value to shareholders through dividend and share repurchase strategies.
This ETF currently has $587 million in total assets and charges an annual expense ratio of 0.50 percent. Intel, Apple and IBM represent three of the five top holdings in TDIV, which has a 30-day SEC yield of 2.68 percent as well. The allocation of each underlying stock in TDIV is calculated according to the size of its dividend.
So far this year, TDIV has gained 12.45 percent and recently hit a new all-time high. This performance bests the industry benchmark Technology Select Sector SPDR (NYSE: XLK) return of 11.68 percent over the same time frame.
For the moment, TDIV is the only ETF that is focused squarely on dividend paying companies in the technology space, and it has been seeing steady inflows as a result. Many of the large-cap holdings in this fund are considered to be mature and stable alternatives to high-beta software or social media names that are focused on using cash to fund growth initiatives.
TDIV will be one ETF to watch closely, as other top holdings such as Microsoft and Cisco report earnings in the near future as well.
Disclosure: The author owned TDIV at the time this article was published.
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