ETFs that could benefit from Apple dividend growth
These dividend funds added the tech company to their holdings and can now stand to gain from the increased payout.
Following another disappointing earnings report, shares of Apple (AAPL) traded in a wide range Wednesday, but to the stock's credit, it closed with just a modest loss.
Perhaps investors are feeling more cheery knowing that Apple plans to return $100 billion to shareholders by the end of 2015 in a plan that includes a 15% dividend increase.
Exxon Mobil (XOM), the largest U.S. oil company, announced a 10.5% dividend increase Wednesday, meaning the Dow component will pay $11.3 billion in indicated dividends. Still, Apple is the largest U.S. dividend-payer in cash terms.
ETF investors have a few options when it comes to getting a slice of Apple's higher dividend, but those options do not include some of the largest dividend ETFs. Funds such as the Vanguard Dividend Appreciation ETF (VIG) and the SPDR S&P Dividend ETF (SDY), which are fine ETFs in their own right, use length of dividend increase streaks as a primary screening criteria (Benzinga).
Since Apple is still new to the dividend increase game, the stock does not qualify for inclusion in VIG, SDY and related ETFs. A somewhat unheralded beneficiary of Apple's increased dividend could be the First Trust NASDAQ Technology Dividend Index Fund (TDIV). As we noted in March (Benzinga), Apple was about to be included in TDIV's underlying index, the NASDAQ Technology Dividend Index.
At the close of trading on April 23, Apple accounted for 7.2% of TDIV's weight, making it the ETF's fifth-largest holding behind Intel (INTC), Microsoft (MSFT), Cisco Systems (CSCO) and International Business Machines (IBM). TDIV, which debuted in August, has nearly $89 million in assets under management. (Microsoft owns and publishes Top Stocks, an MSN Money site.)
Investors have a few other Apple dividend ETF options in addition to TDIV. In December, WisdomTree (WETF) announced several of its popular dividend funds would include Apple in their lineups (Benzinga).
As of April 23, the $1.57 billion WisdomTree LargeCap Dividend Fund (DLN) had a 2.5% weight to Apple, making the stock ETF's sixth-largest holding just behind Pfizer (PFE) and just ahead of Chevron (CVX).
Apple is also the sixth-largest holding in the WisdomTree Total Dividend Fund (DTD) and the second-largest holding in the WisdomTree Total Earnings Fund (EXT), although EXT is not a pure dividend ETF.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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