With the Invesco QQQ (QQQ) higher by a scintillating 15.38% for the month ending May and trading around record highs, clients and investors are to be forgiven if they’re not thinking about technology’s equity income proposition.
After all, QQQ’s dividend yield of 0.42% is miniscule and the capital appreciation is seemingly piling up, rendering payouts “nice but not necessary” in the eyes of some market participants. Yet quiet as it is kept, many QQQ member firms as well as an array of familiar technology names trading on the New York Stock Exchange (NYSE) are dividend payers.
Not only that, they’re dividend growers – a theme encapsulated in the ProShares S&P Technology Dividend Aristocrats ETF (TDV). The $270.7 million TDV, which turned six years last November, tracks the S&P® Technology Dividend Aristocrats® Index. Though that’s obviously a Dividend Aristocrats, its bar for entry is more relaxed than older aristocrats gauges. In this case, a stock must have a minimum payout increase streak of seven years.
Those are the breaks when marrying dividends and tech, but the good news is many TDV constituents far exceed that requirement and some recent additions to the tech dividend fray (not the ETF) could soon qualify for admittance, too.
Tech Dividends Still Emerging, Growing
Believe it or not, TDV is actually beating QQQ on a year-to-date basis and the ProShares ETF is also doing an admirable job of keeping pace with the S&P 500 Technology Index and that’s without the benefit of Nvidia (NVDA) and Alphabet (GOOGL), among others, being among TDV’s holdings. However, Alphabet is growing its dividend, indicating it could one day find its way into the TDV portfolio.
Focusing on the here-and-now, tech’s dividend credibility increased in exponential fashion in recent years. Thanks to soaring revenue, increasingly firm balance sheets and positioning at the heart of artificial intelligence (AI), the theme of payout growth is likely to continue.
“Technology and tech-related stocks have turned high rates of revenue growth into profits with the support of trends that could have long runways, such as artificial intelligence, digital transformation, and cloud computing,” according to ProShares research. “As these companies have matured, many of them have begun to generate substantial free cash flow, enabling them to return capital to shareholders through dividends.”
(Image Courtesy: ProShares)
There was a time (some investors retain this point of view) that dividends were looked at as bad news in the technology sector, but perspective is needed. Dividend initiation and subsequent increases signal management confidence in their companies’ growth trajectories. As just two examples of TDV holdings, it’s unlikely most investors would quibble with the multi-year growth offered by Applied Materials (AMAT) and Broadcom (AVGO).
TDV for Value?
TDV isn’t a value ETF in the strictest sense of the term, but as the chart below indicates, the ETF’s holdings in aggregate offer more value than the broader tech sector and as the fund’s aforementioned 2026 confirms, this isn’t a value trap.
(Image Courtesy: ProShares)
In addition to the growing dividends, clients may like this ETF because it equally weights its holdings, meaning single-stock risk is benign and it’s more diverse than traditional cap-weighted sector ETFs.
“Cap-weighted indexes, especially in tech, are often heavily influenced by a small number of mega-cap stocks. An equal-weight approach distributes exposure more evenly across constituents,” concludes ProShares. “This structure can both enhance diversification and provide exposure to a broader set of companies as market leadership evolves.”
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