Wednesday brought another much ballyhooed September product reveal event from Apple (AAPL), the largest U.S. company by market value. However, Apple stock finished the day lower by almost 2%, reflecting Wall Street’s lack of enthusiasm for some of Apple’s newly unveiled products.
A day’s worth of reaction is just that — a day — and it does not mean Apple stock will not eventually produce positive results on the back of new products such as a pricier, beefed-up iPad, newly upgraded iPhones and the widely anticipated Apple TV, which is slated to launch next month.
Bolstering the case for buying Apple stock following the recent dip is this nugget from USA Today:
“The iPhone 6s and iPhone 6s Plus are expected to rack up hefty sales when they become available Sept. 25 for $199 to $499 with a two-year contract, or installment plans of $27 and $31 a month for 24 months.”
Investors looking to mitigate some of the risk that comes along with single-stock ownership can turn to a plethora of exchange-traded funds that feature solid weights in Apple stock. In fact, roughly 90 ETFs offer investors exposure to Apple stock, though some hold AAPL more heavily than others.
Investors looking for different ways to hold Apple stock should start here:
Ways to Bite Into Apple Stock: iShares U.S. Technology ETF (IYW)
AAPL Weighting: 19.5%
Expenses: 0.43%, or $43 annually for every $10,000 invested
The $2.5 billion iShares U.S. Technology ETF (IYW) is home to a nearly 20% weight in Apple stock — the largest among ETFs that hold shares of the California-based company.
With such a heavy allocation to Apple stock, it is safe to say the iPhone is the prime determinant of IYW’s price action.
Drilling down further on the ETF, investors will see that Microsoft (MSFT), Facebook (FB) and two classes of Google (GOOG) shares combine for another 27% of IYW — so this is not just a top-heavy fund because of Apple. Five stocks (across four companies, thanks to Google’s dual share classes) command 47% of the fund’s weight!
Still, it’s hard to look at IYW and not call it an “Apple ETF.”
Investors rightfully will want to quantify the impact of Apple stock on IYW. Well, AAPL is up more than 180% over the past five years while IYW has returned just more than 81% over that period, and you’ll see that many of the fund’s ebbs and flows look awfully familiar to the movements of Apple. While Apple isn’t everything to IYW, it does make its mark.
Ways to Bite Into Apple Stock: iShares Global Tech ETF (IXN)
AAPL Weighting: 14.79%
Expenses: 0.47%
Investors looking for a global approach to Apple stock via ETFs can, sort of, get their passports stamped with the $810 million iShares Global Tech ETF (IXN).
In fund parlance, “global” means a fund that includes U.S. equities and stocks from other countries. In ETF parlance, it means a fund that usually features a massive weight to U.S. stocks and scant international exposure. That is the case with IXN as U.S. stocks account for 78.2% of the ETF’s weight, but on the upside, that includes a nearly 15% allocation to Apple stock.
IXN’s weight to Apple stock is nearly 670 basis points larger than its allocation to Microsoft, the ETF’s second-largest holding. IXN’s ex-U.S. country weights are predominantly Asian nations, as Japan, South Korea, Taiwan and China combine for about 13% of the fund’s weight.
IXN’s status as a global ETF lightly levers the ETF to an Apple rival in the case of Samsung (SSNLF) and an Apple supplier in the case of Taiwan Semiconductor (TSM).
Ways to Bite Into Apple Stock: First Trust Nasdaq Technology Dividend Index Fund (TDIV)
AAPL Weighting: 7.7%
Expenses: 0.5%
Don’t forget Apple stock as a dividend destination. Apple stock yields 1.9%, slightly below the current yield on 10-year U.S. Treasuries. While that yield is not jaw-dropping, the dividend growth on Apple stock is. Apple’s quarterly dividend has grown from just 38 cents per share three years ago to 52 cents.
The theme of technology sector dividend growth can be accessed with the First Trust Nasdaq Technology Dividend Index Fund (TDIV), an ETF that we highlighted earlier this year and a fund that has a nearly 8% weight to Apple stock. That doesn’t sound like much, but it’s still significant — only six ETFs have larger weights to Apple stock than does the $495.2 million TDIV.
TDIV requires constituent firms to have a minimum dividend yield of 0.5% for inclusion. The ETF also filters potential dividend cutters by mandating that no companies that have pared payouts in the past year can be included in the fund.
As is the case with Apple’s stock, TDIV’s trailing 12-month yield of 2.6% isn’t jaw-dropping, but the recent dividend growth among TDIV’s top 10 holdings — a group that combines for about 55% of the ETF’s weight — is.
As of this writing, Todd Shriber did not hold a position in any of the aforementioned securities.
