A Fund for Tech Stocks That Pay Juicy Dividends
A fund loaded with big tech firms yields almost as much as the market’s 2%.
On a relative basis, it has been a subpar year for big tech. Over the past year, the group rose 23%, but that lagged Standard & Poor’s 500-stock index by 7 percentage points. That’s one reason tech stocks, which historically have been more expensive than the broad stock market, are looking like bargains these days. The typical large tech-company stock trades at 14 times estimated 2014 profits, while the S&P 500 sells for 15 times earnings.
Technology Select Sector SPDR (symbol XLK) offers broad exposure to technology, but it’s not exactly a pure play on the sector. The exchange-traded fund tracks an index of 72 established firms in the S&P 500, including six telecom companies. The phone companies help boost the ETF’s dividend yield to 1.7%, close to the 2.0% yield of the S&P 500.
Because the ETF is heavy on large companies, the fund hasn’t been as hot as Internet-focused ETFs, which invest in faster-growing firms. Some of those ETFs have gained upward of 40% over the past 12 months, boosted by big gains from the likes of Netflix (up 348%) and Pandora (up 226%). But Technology SPDR hasn’t experienced the same ups and downs, either—over the past five years, it has been about 25% less volatile than the PowerShares Nasdaq Internet ETF.
![https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-200-80.png](https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-320-80.png)
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
In keeping with the benchmark it tracks, the ETF is rebalanced quarterly. The index holdings are weighted by market value, but that rule goes by the wayside if a stock exceeds 25% of the fund’s assets.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
-
5 Stocks to Buy for a Trump Presidency
The race for the White House is heating up and these five stocks are set to benefit if Donald Trump claims victory.
By Will Ashworth Published
-
6 Target-Date Funds to Buy For Your Retirement
These six target-date funds are good set-it-and-forget-it options that are a staple of retirement plans.
By Nellie S. Huang Published
-
The 5 Best Actively Managed Fidelity Funds to Buy Now
mutual funds In a stock picker's market, it's sometimes best to leave the driving to the pros. These Fidelity funds provide investors solid active management at low costs.
By Kent Thune Last updated
-
The 12 Best Bear Market ETFs to Buy Now
ETFs Investors who are fearful about the more uncertainty in the new year can find plenty of protection among these bear market ETFs.
By Kyle Woodley Published
-
Don't Give Up on the Eurozone
mutual funds As Europe’s economy (and stock markets) wobble, Janus Henderson European Focus Fund (HFETX) keeps its footing with a focus on large Europe-based multinationals.
By Rivan V. Stinson Published
-
Best Bond Funds to Buy
Investing for Income The best bond funds provide investors with income and stability – and are worthy additions to any well-balanced portfolios.
By Jeff Reeves Last updated
-
Vanguard Global ESG Select Stock Profits from ESG Leaders
mutual funds Vanguard Global ESG Select Stock (VEIGX) favors firms with high standards for their businesses.
By Rivan V. Stinson Published
-
Kip ETF 20: What's In, What's Out and Why
Kip ETF 20 The broad market has taken a major hit so far in 2022, sparking some tactical changes to Kiplinger's lineup of the best low-cost ETFs.
By Nellie S. Huang Published
-
ETFs Are Now Mainstream. Here's Why They're So Appealing.
Investing for Income ETFs offer investors broad diversification to their portfolios and at low costs to boot.
By Nellie S. Huang Published
-
Do You Have Gun Stocks in Your Funds?
ESG Investors looking to make changes amid gun violence can easily divest from gun stocks ... though it's trickier if they own them through funds.
By Ellen Kennedy Published