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Technology Dividend ETFs for Growth & Income

Neena Mishra

Technology companies were earlier known mainly for their growth potential. Most technology companies did not pay dividends 10-15 years back but over the past few years many technology companies, particularly older technology companies, have instituted and grown their dividends.

These companies have a lot of cash on their balance sheets and have started returning some to their shareholders in the form of dividends and buybacks.

Per S&P Dow Jones the tech sector contributed about 5.6% of the S&P 500’s dividends a decade back and now the contribution is about 15%. The sector has been the biggest contributor to dividend growth over the past eight years and is expected to lead dividend growth over the longer term.

We have talked about high quality dividend growth ETFs in the past—ETFs that look at companies with 10 years or 25 years consistent dividend growth record.

But due to their backward looking dividend screens, these ETFs do not hold many technology companies like Microsoft (MSFT), Apple (AAPL) or Cisco (CSCO). MSFT and CSCO were not paying dividends 25 years back, Apple was not paying dividends 10 years back.

Many old technology companies have reported better-than-expected earnings this quarter and then due to hefty dividend yields, investors have been pouring money into these stocks. These established companies have the potential to sustain these dividends with their earnings.

Investors seeking income and growth could look at these Dividend ETFs focused on the tech sector--First Trust NASDAQ Technology Dividend ETF (TDIV) and WisdomTree US Quality Dividend Growth ETF (DGRW).

To learn more, please watch the short video below:


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FT-NDQ TECH DIF (TDIV): ETF Research Reports
 
WISTR-US QD (DGRW): ETF Research Reports
 
MICROSOFT CORP (MSFT): Free Stock Analysis Report
 
APPLE INC (AAPL): Free Stock Analysis Report
 
CISCO SYSTEMS (CSCO): Free Stock Analysis Report
 
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