Apple to be Added to Several WisdomTree ETFs
By ETF Professor | December 14, 2012 6:49 AM EST
Due to the technology sector's burgeoning status as destination for income investors, some of the sectors dividend-paying members are becoming more prominent in dividend-focused ETFs. Predictably, ETF and dividend investors alike want to know when Apple (NASDAQ: AAPL), which earlier this year announced its first payout since 1995, will join dividend funds.
At least one ETF issuer is providing an answer. WisdomTree (NASDAQ: WETF) today announced the results of its annual index rebalancing, noting that Apple will make its way into several of the issuers dividend-focused funds later this month.
One of the indexes that has been rebalanced is the WisdomTree Dividend Index (WTDI), the index tracked by the $268.4 million WisdomTree Total Dividend Fund (NYSE: DTD). At the close of trading on December 21, Apple will become DTD's third-largest holding at a weight of just over three percent.
The WisdomTree LargeCap Dividend Index (WTLDI), the index tracked by the WisdomTree LargeCap Dividend Fund (NYSE: DLN), will also make room for Apple on December 21. The iPad maker will become the index's third-largest holding behind Exxon Mobil (NYSE: XOM) and AT&T (NYSE: T). Apple will have a weight of almost 3.6 percent in that index.
DLN, which has almost $1.3 billion in assets under management, has a distribution yield of 6.86 percent, according to WisdomTree data.
Given the rise of technology names as dividend payers, it is not surprising to see these stocks, Apple included, take on more prominent roles in dividend ETFs.
"Information Technology sector dividends have grown a remarkable 172.18% since November 30, 2007. At the prior peak, this sector comprised only about 5.6% of the dividend stream, whereas now it comprises more than 13% and is the third-largest dividend-paying sector behind Consumer Staples and Financials," said WisdomTree Research Director Jeremy Schwartz in a note.
Not only that, but the technology sector is expected to be home to the most robust dividend growth in the coming years due to the massive cash hoards held by some of the group's constituents. Along those lines, cash-rich Apple could double its payout within three years, Barron's reported in November.
Schwartz notes there "were 124 additions to the U.S. dividend stream this year, and they contributed an increase of about $17.3 billion. Over 50% of this increase comes from Apple—the third-largest contributor to the dividend stream behind only Exxon Mobil and AT&T at the November 30, 2012, screening date."
Other WisdomTree ETFs that could see altered stakes in Apple include the WisdomTree Total Earnings Fund (NYSE: EXT). The iPhone maker currently accounts for 3.2 percent of EXT's weight, making it the fund's second-largest holding behind Exxon. However, EXT's index, the WisdomTree Earnings Index (WTEI), will push Apple to a weight of over 4.2 percent when its rebalance goes into effect on December 21.
The WisdomTree Earnings 500 Fund (NYSE: EPS) is also likely to get a new look with Apple. That stock currently accounts for 3.63 percent of the fund's weight, but the WisdomTree Earnings 500 Index will rebalance as well, pushing Apple to a weight of almost 4.86 percent, making the stock the index's largest constituent.
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