Top 5 Tech Dividend ETFs to Consider by a millionaire investor. Remember if you want to be a millionaire you must have the mindset of a millionaire and breaking down stocks like this will allow you to look past the noise of the media and make a decision if these ETFs fit your portfolio.
In this article, I'll cover the Top 5 Tech Dividend ETFs to consider. These funds include Vanguard Information Technology ETF VGT, Invesco QQQ, ARK Innovation ETF ARKK, and iShares Semiconductor ETF SOXX. If you are looking for the best tech dividend ETF, I recommend you start by researching the Invesco QQQ Trust. This fund has over $130 billion in assets, and tracks the NASDAQ-100 Index, which isn't specifically tech. With sector exposures of 48% Technology, 20% Communication, and 17% Consumer Discretionary, the Invesco QQQ Trust has broad diversification within the tech sector. The fund is also extremely low-cost, with an expense ratio of 0.20%.
What are the best Tech ETFs that pay Dividends?
Below I go into detail why I think these are the best Tech ETFs that pay dividends.
Vanguard Information Technology ETF VGT
The Vanguard Information Technology ETF (VGT) tracks the market cap of the information technology industry. Investors can benefit from the low expense ratio of this fund. Its holdings include some of the largest and most important technology companies in the world, as well as companies positioned for rapid growth. For this reason, VGT is one of the top tech dividend ETFs.
The Vanguard Information Technology ETF VGT is a cap-weighted technology fund that holds 330 companies. Its assets are distributed according to market cap, which means that larger companies are more expensive. In fact, nearly 40% of its assets are in Microsoft and Apple, two of the world's most profitable companies. Therefore, investing in these companies could provide you with good returns.
Another great feature of Vanguard Information Technology ETF VGT is that it does not have to account for the rise and fall in the number of shares outstanding. In addition, it doesn't have to make trades to keep up with changes in cash balance. This allows for a very low turnover rate, making it a great choice for investors who are looking to earn a high dividend from a technology-heavy portfolio.
As for the other top 5 tech dividend ETFs, VGT is a top pick among investors looking to gain exposure to rapidly growing IT companies. With a low price, it's a great way to diversify your investments. But be sure to choose the fund that best meets your needs. It's worth the effort to find a fund that suits your investment objectives and budget.
Invesco ETF QQQ
Despite the volatility of the technology sector, the Invesco ETF QQQ is a solid choice for active traders who favor large, innovative technology companies. Investors who choose this ETF can get liquid exposure to the Nasdaq 100 index without having to worry about stock-picking problems. But the QQQ does have some drawbacks, and it is not a good choice for those seeking growth.
The largest and most liquid ETF, QQQ tracks the NASDAQ-100 Index, which is not explicitly a tech sector. That diversification makes it useful as part of a buy-and-hold approach, but less useful as a component of a balanced long-term strategy. However, investors with a tech tilt may find this fund helpful in their portfolio.
While many tech names do not pay dividends, some do, including Meta Platforms and Alphabet. Other tech mega-caps do, but they typically offer only below-average yields. Apple, for example, pays a dividend yield of 0.5%, while Microsoft pays out more than 0.8%. While QQQ does not pay high dividends, it does have a solid dividend growth rate. According to Seeking Alpha, its dividend yield has increased by 13% over the past decade and 7% in the last five years. That said, it's not a great income pick. At its current dividend yield of 0.5%, the Invesco ETF QQQ is not a great income pick, as it would have to grow at this rate to reach its current payout of $1.74 per share.
Invesco ETF QQQ is among the top five tech dividend ETFs. It manages around $177 million in assets and trades about 76,000 shares per day. Another option is the Invesco Dow Jones Industrial Average Dividend ETF, which gives investors exposure to the dividend-paying companies of the Dow Jones Industrial Average. QQQ holds 28 companies, including IBM, which takes the fourth position with a 6.5% allocation.
ARK Innovation ETF ARKK
The ARK Innovation ETF ARKK focuses on fast-growing companies in disruptive and innovative industries. It currently holds 56 stocks. Its holdings include genomics firms, energy and automation firms, manufacturing companies, and others. This highly concentrated portfolio is prone to wild swings in net asset value. It is advisable to use this ETF with caution, since its performance is not yet clear. However, investors can follow Cathie Wood's investments by following her website.
The ARK Innovation ETF, the flagship of Cathie Wood's investment firm, has performed extremely well during the recent pandemic, but it may not deliver the same returns in the long term. This fund's overall exposure to individual names is troubling, especially now that technology stocks have been pummeled in recent months. Despite this, the ARKK is still worth a look, as a $10,000 investment today would have been worth more than $80,000 in 2022. But recent tech rout has cut that number dramatically, with the fund worth less than $60000 by then.
While this index fund's long-term performance may not look as impressive, investors can rest assured that it has consistently produced significant alpha over the past few years. However, it has fallen by more than 50% since the start of the year, and the risk is now even greater. Further, the ETF is overweighting high-multiple tech stocks, and its high-multiple exposure exposes it to further declines in valuations.
Although ARK Invest has performed well in 2020, there is a risk that the team at Ark Invest did not know better. Perhaps Cathie Wood and her team simply thought their strategies would always work. Cathie Wood has not said she was wrong, claiming that they employ the best analysts. The fund's performance may have been a beneficiary of low interest rates and easy monetary policy. With the Fed starting to raise interest rates and shrink its balance sheet, growth names are not so favoured in the market.
iShares Semiconductor ETF SOXX
The iShares Semiconductor ETP (NYSEARCA:SOXX) is a passively managed exchange traded fund that tracks the prices of semiconductor companies. These companies make up an integral part of modern computing, serving as the brains of many devices. As such, their demand is bound to continue as new devices are developed and released. Though the fund is heavily weighted toward U.S. stocks, it has nearly one-quarter of its assets in foreign firms. This ensures that the fund is geographically well-diversified.
This ETF is managed by Blackrock and seeks to match the PHLX SOX Semiconductor Sector Index. While it does not track individual companies, the ICE Semiconductor Index provides an excellent benchmark for semiconductor companies. The ETF's performance has also been aided by recent trends in cloud computing, big data, and artificial intelligence. To help you better understand the performance of this ETP, visit its Channel.
Blackrock sponsors the SOXX fund, which has over $8.30 billion in assets. Its objective is to match the performance of the Technology - Semiconductor sector of the equity market. The index measures the performance of semiconductor companies. The lower the cost of the product, the better the performance. The annual operating expense is only 0.43%, making it a relatively low-cost investment.
State Street Technology Select Sector ETF XLK
The State Street Technology Select Sector ETF (XLK) seeks to track the performance of a subset of the technology industry. It invests primarily in securities in the Technology Select Sector Index (TSSI). While this fund is non-diversified, it is still one of the best choices for investors looking to invest in technology. The fund's expense ratio is 0.75%, which is lower than many other ETFs within the "Equities" asset class.
The State Street Technology Select Sector ETF was launched on 12/16/1998. It is passively managed and provides broad exposure to the Technology - Broad sector of the equity market. Passive-managed ETFs have become increasingly popular among investors due to their transparency, low fees, and flexibility. They are also great investments for long-term investors. Sector ETFs provide low-risk, diversified exposure to a subset of companies in specific sectors. Technology - Broad is one of the sixteen broad categories defined by Zacks.
Thanks for reading my millionaire investor friends, be sure to check out my millionaire mindset basics article.