🚀Tech Meets Dividends: The TDV Revolution

Technology stocks have been the top-performing sector in recent years. Yet, they are often perceived as incompatible with dividend investing. Typically, tech companies focus on growth rather than consistent dividend payments. However, the ProShares S&P Technology Dividend Aristocrats ETF (TDV) offers a unique opportunity to invest in tech innovation while benefiting from steady dividend growth. Let's have a look at this ETF today.

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What is TDV?

In our newsletter, we have covered "Dividend Aristocrat" ETFs like NOBL and REGL. Here, TDV focuses on established technology companies that have consistently raised dividends for at least seven years. These ETFs are provided by ProShares, a prominent ETF issuer known for its innovative investment solutions.

The technology sector has undergone a remarkable evolution over the past few decades. Initially centred on high growth and reinvestment, it has now matured, with many established tech companies generating substantial free cash flow. This financial stability enables them to return value to shareholders through dividends while continuing to innovate.

TDV offers exposure to technology and tech-related companies across various subsectors. This diversification allows investors to benefit from technological advancements while focusing on dividend growth.

Investment Strategy🤔

Incorporating TDV into your investment portfolio requires thoughtful consideration of your overall investment strategy. Here are several implementation approaches:

• 📱Core Technology Holding: For investors seeking technology exposure with a defensive twist, TDV can serve as a core technology holding. The dividend growth requirement adds a quality screen that may help reduce volatility compared to broader technology indexes.

• 🤑Income-Focused Technology Allocation: In a dividend-focused portfolio, TDV can provide technology sector exposure while maintaining the portfolio's income-generating objective. This approach allows investors to participate in technological growth without sacrificing income requirements.

• 🔼Quality Factor Exposure: The dividend growth requirement effectively serves as a quality screen, making TDV suitable as part of a factor-based investment strategy. Companies that consistently increase dividends often demonstrate strong financial health and disciplined capital allocation.

• 🛡️Risk Management Tool: TDV can reduce the overall volatility of a technology allocation. Investors may achieve smoother returns by focusing on dividend-paying companies rather than growth-focused technology investments.

TDV at a glance

ETF Issuer: ProShares

Inception: 2019-11-05

Asset Class: Equity

Underlying Index: S&P Technology Dividend Aristocrats Index

Geographical Focus: U.S.

Expense Ratio: 0.45% (as of last data point)

Dividend Yield: 1.11% (as of last data point)

Distribution Frequency: Quarterly

Historical Performance

TDV was launched in 2019, which means its trading history encompasses both bull and bear market conditions. It has demonstrated several notable characteristics:

• Lower Volatility: Compared to broader technology indexes, TDV has generally exhibited lower volatility, particularly during market downturns.

• Quality Performance: During periods of market stress, particularly when growth stocks faced challenges, TDV's focus on quality dividend-paying companies has helped provide relative stability.

• Market Recovery Participation: While the ETF may not capture all the upside during strong technology rallies, it has demonstrated the ability to participate in market recoveries while maintaining its dividend focus.

ETF Radar View

The radar chart below shows the general characteristics of the ETF:

Top 3 Reasons to Invest

1. Quality Technology Exposure: TDV's dividend growth requirement is an effective quality screen. Companies that consistently increase dividends can be particularly valuable in the technology sector, where business models and competitive landscapes can change rapidly.

2. Risk-Managed Technology Investment: The focus on dividend-paying companies can provide a measure of risk management compared to broader technology investments. This feature may appeal to risk-conscious investors seeking lower volatility technology exposure.

3. Secular Growth with Stability: TDV offers exposure to secular technology growth trends while focusing on financial stability. This combination can be particularly attractive in long-term investment strategies.

Top 3 Reasons Not to Invest

1. Growth Focus: Investors primarily seeking exposure to high-growth technology companies might find TDV's dividend focus limiting. The ETF may not capture the full upside potential of emerging technologies and early-stage companies.

2. Yield Requirements: While TDV provides dividend exposure, investors with specific high-yield requirements might find other dividend-focused ETFs more suitable.

3. Concentration Risk: The modified dividend aristocrat criteria and technology sector focus can result in a relatively concentrated portfolio. The number of holdings is less than 50, meaning the ETF has limited diversification.

💼TDV: Where Silicon Valley Meets Dividend Stability

The ProShares S&P Technology Dividend Aristocrats ETF provides a distinctive strategy for investing in the technology sector. It merges the growth potential of technology with the stability of dividend growth, making it an appealing option for investors.

However, as with any investment, it's essential to assess TDV based on your individual investment goals.

We encourage you to join the ETF UNO community to continue discussing TDV and other innovative ETF solutions. Our community offers:

• Regular ETF analysis

• Portfolio construction insights

• Market perspectives

• Investment strategy discussions

Together, we can navigate the evolving ETF landscape and build more effective investment portfolios.

DISCLAIMER: This article is for informational purposes only and should not be considered as investment advice. Always conduct your own research and consult with a financial advisor before making investment decisions.