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John Chafee, an American politician and officer in the United States Marine Corps, was quoted as saying, “Caution, not exuberance, should be our fiscal motto.” And, as the methodical, yet not risk-adverse, man that I am, I concur.
While the proverb “no risk, no reward” does hold water in certain situations, it is not necessarily the way life should be lived, nor the way money should always be invested.
In an oversaturated and over-extended market, it’s imperative we look at the core value of an ETF and weigh its core value against its current valuation — again, caution over exuberance.
So, in saying that, today, we are looking at a value tech ETF, where innovation meets income without being too extended, value wise.
The First Trust NASDAQ Technology Dividend Index Fund (TDIV) is a fund that proves you can have your chips and cash them too. Unlike many tech ETFs that chase high-growth, no-dividend darlings, TDIV holds a portfolio of up to 100 companies classified as a technology or telecommunications company under the Industry Classification Benchmark. These companies range from semiconductor powerhouses to software giants and telecom backbones.
The fund applies two layers of filters: the first layer is U.S.-based companies with proven dividend-paying histories, which signal financial health, disciplined capital allocation and consistent free-cash flow. The second layer is dividend-paying companies that may provide a buffer during market downturns, turning volatility into reinvestment opportunities.
The fund has net assets of $3.37 billion and assets under management of $3.45 billion. TDIV’s sizable AUM often signals fund stability, credibility and reduced risk of closure. Moreover, the fund has a moderate expense ratio of 0.50%, which means that investors will not need to break the bank to pad their own bank accounts. If these financials aren’t intriguing enough, TDIV offers a tidy dividend yield of 1.4% — paying out an annual dividend of roughly $1.28.
Courtesy of stockcharts.com.
As the chart shows us, TDIV is soaring ever-higher in terms of its daily trading — nudging toward the higher end of its 52-week range, which is $93.17, and the fund is currently trading at $92.45. While April saw a massive dip, it almost aids in proving the strength of the fund, given that it’s not only reclaimed its strong upward movement, but in fact, surpassed it.
The fund’s top 10 holdings include Oracle Corporation (NYSE: ORCL), 9.90%; Broadcom Inc. (NASDAQ: AVGO), 8.70%; Microsoft Corporation (NASDAQ: MSFT), 8.31%; Texas Instruments Incorporated (NASDAQ: TXN), 7.10%; International Business Machines Corporation (NYSE: IBM), 7.00%; Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM), 4.48%; QUALCOMM Incorporated (NASDAQ: QCOM), 3.62%; Analog Devices, Inc. (NASDAQ: ADI), 2.78%; Applied Materials, Inc. (NASDAQ: AMAT), 2.10% and Cisco Systems, Inc. (NASDAQ: CSCO), 1.94%.
In essence, this is an ETF that serves to highlight the term “value tech” — as it is offers holdings that run the technology gamut yet offer two layers of filters that can help investors stay protected from excessive risk. TDIV balances growth potential with income stability. It’s essentially a tech-savvy way to invest in tomorrow’s breakthroughs — without giving up today’s cash flow.
However, it is important to do your own research to assess the data and risks for what works best for your personal investment goals. Investors should always do their due diligence before adding any stock or fund to their portfolio.
As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.
