Why I Like Vanguard's Telecom ETF: Opinion
Naturally, there is an array of broader tech ETFs that might capture a wider pickup in IT spending and the capital appreciation of shares that might come with it. Nevertheless, few ETFs will offer the "cap app" potential alongside a more robust yield.
4. Speaking of a 3.5% yield. Like the utilities sector, the telecom sector is known for reliable and above-average dividends. Unlike utilities, telecom is not historically overvalued, nor is it as price-sensitive to rising bond yields. VOX currently offers 3.53% and has an expense ratio of a mere 0.14%. The yield is 160 basis points higher than the 10-year and 140 basis points greater than the dividend of the SPDR S&P 500 Trust (SPY), making VOX very desirable in the ultra-low rate environment.
5. Consistent technical support at its long-term trendline. Since early February of 2012, VOX has tested its 200-day moving average on three separate occasions. Each time, the technical trend proved resilient.
This fact does not imply that telecom will never sink or that it is impenetrable. It simply tells me that, when it is struggling, yield-hunters or dip-buyers have been stepping up to the purchasing plate.Follow @ETFexpert This article was written by an independent contributor, separate from TheStreet's regular news coverage.
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