This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

New Tech-Based ETF Is Heavy on Dividends, Light on Apple

NEW YORK ( TheStreet) -- Many investors know that dividends have become increasingly popular in the last couple of years under the weight of diminished expectations for equity market growth. There are certain sectors of the market, like utilities, that can be relied upon for dividends.

Technology has not been one of those sectors until recently. Now, however, investors can access tech dividends in the ETF space through the First Trust Nasdaq Technology Index Fund (TDIV).

The fund is probably best compared to the Technology Sector SPDR (XLK) because both funds own mostly technology stocks with a small percentage in telecom stocks. TDIV actually targets 80% in tech stocks and 20% in telecom.

The methodology underlying the fund builds a universe of stocks that have a market cap of at least $500 million, yield at least 0.5%, have not cut their dividend and have a minimum trading volume. The next step is to weight the stocks in this universe by market, not dividend yield, so the largest holdings are very familiar names like Qualcom (QCOM - Get Report), Microsoft (MSFT - Get Report), IBM (IBM - Get Report), Intel (INTC - Get Report) and Cisco (CSCO) which all have about a 7% target weight in the fund.

Of those five stocks only INTC has had a yield above 3%, Cisco just increased its dividend and it now should be 3%, so it was surprising to hear from First Trust that the index yield is currently "just above 3%" but after a closer review it looks like much of the yield will be attributed to telecom stocks like Vodaphone (VOD), AT&T (T), Century Link (CTL) and Verizon (VZ) along with some other high yielding telecom stocks. Like utilities, telecom is also a good source for yield.

The above telecom stocks only have 2% weightings in the fund but their yields range from 4.5% to 6.8% and there are some other telecom stocks in the fund that have similarly high yields.

The expense ratio for TDIV is 0.50% so an index yield of close to 3% would imply that the fund will yield 2.5%. But, as is the case with any new ETF, there can be no certainty of what the actual yield will be.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
XLK $42.97 -1.44%
INTC $33.10 -1.03%
IBM $170.13 -1.21%
MSFT $46.59 -0.66%
QCOM $69.36 -0.22%

Markets

DOW 18,041.54 -190.48 -1.04%
S&P 500 2,104.20 -21.86 -1.03%
NASDAQ 5,032.7510 -56.6110 -1.11%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs