Tom’s Takes on Promising ETFs
Transcript:
Katie Nealis:
What are a couple of growth ETFs to watch right now? And what are a couple of dividend ETFs to watch for right now as well.
Tom Vaughan:
Okay, yeah, that’s, that’s an interesting one. Actually, let me pull up my chart again here. And we can look at kind of what’s happening. And I’ll share my screen.
Let’s see here. All right, so we’ve got here’s one, growth ETF. So keep in mind that actually, in the, you know, year to date, really, the growth section of the market has not done that, well, you can kind of see that here. This is a, this is an i shares, its exponential technology. This is a really cool exchange traded fund that has a whole mixture of different exponential technologies, even in health care area, and what have you. And but you can see, you know, the biggest gains came, you know, prior to this year, this is the beginning of this year. And it’s a ticker symbols x t. But we currently have this in the portfolio, we made some money, we bought it, you know, in this timeframe, but one of the things that I watch for really, is just kind of breakout. So if I draw a little trend line there, you can see, hopefully see that little red line there. And also, theoretically, the thing is, has potential to break out above this line. And you could see a nice run there. And it’s actually held up pretty well overall, when you look at all of the different growth funds out there. So that’s what we have in our portfolio and in our model right now. And then there’s another one here,
I can show you, this is x i t k, and this is spider, which is state street’s one of the big money managers out there. And this is again, an exchange traded fund. And this is a innovative technology ETF also, now you can see that one again, had huge run, you know, peaked out here, the 12th of March, February was the peak for most of these things. And we still own this, uh, not in our models, which we use in our IRAs, but in our taxable accounts, just because we still have such a huge gain. And, but I would put it in my models, especially if it breaks out. And you can see here on this trend, it’s right there right now. So this thing breaks out, it’s got a lot of overhead resistances big block of shares that was purchased here, it’s going to make it hard for it to go, because everybody that bought here might be looking to get their money back, right? If they, if they bought it down here and it runs back up. They might say okay, I’ll take it. But you can see if it ever gets through this level, which would be a really good buy area right here. Because there’s, you know, virtually no resistance above that, because there weren’t that many shares traded there.
So this is one I’d be watching also XITK, I think it’s worth looking at this now above the 200, day moving average, the 200 day moving average is going up, etc. So there’s some potential there. I don’t do a lot of dividend pieces. But one that I’ve been watching a lot is this one here, this is I shares, again, I shares this is actually owned by BlackRock, which is a monster’s money manager. This is called select dividend ticker symbols, DVY, you can see this is actually a totally different chart pattern. And both of those went sideways, you know, for most of last year, because everybody last year was buying growth stocks. And you saw that in those other two charts, right? I mean, there was a huge run up through here. But all of these took off on the ninth of November. See that big jump right there. And so the ninth of November was when Moderna announced their initial results from their phase three trial, which was very, very positive. And it turned out to be a really important timeframe. And so dividend stocks tend to be kind of those value stocks on the other side of the equation. And a lot of these stocks are stocks that were beat down because of the pandemic. And so you’ve seen just a phenomenal run, you know, very strong in a way above the 200 day moving average, but this is a decent dividend stock. I don’t buy things just for dividend, you know, because you can get a 5% dividend and lose 10% on the price. The price is much more important to me than the dividend but this would be one that I’d take a look at as far as that goes.
Oh, what kind of companies are in dividend? ETFs like whatever value companies? Well, okay, so, generally speaking, when you’re growing really fast as a company, you’re putting all of your money into that growth, development, maybe you’re buying other, you know, growth companies or what have you. And so you don’t really have money to pay a dividend. Oftentimes when you see a dividend, it is either from a more established company like Apple now pays a dividend micro Microsoft pays a dividend. They’re not huge dividends, but what you’re normally seeing in this dividend arena, and really what’s kind of running here is what’s called a value stock. So value stock is just essentially a stock that is selling for, you know, relatively inexpensive compared to its earnings, whereas a growth stock can be quite expensive compared to its earnings, but you’re hoping that it continues to grow really fast. And so you’ll see a lot of value stocks pay dividends, and one of the reasons they pay dividends and sometimes they pay fairly big dividends is just to attract investors. So AT&T was paying a pretty high dividend roughly 7%. And then they cut it by 40%, a couple of weeks ago, in a deal that they were doing to spin off, you know, their time warner purchase, and their stock dropped, I think it dropped about 40%. And again, because people are buying that for the dividend and so if you’re gonna go sorry, that dividend was cut by 40%. The stock dropped, you know, pretty dramatically, but they were buying it for the dividend. And so that’s a, that’s a problem. But that’s what you’ll see in here. So, you know, kind of industrials, you know, your GE ease of the world pay nice dividends, AT&T, older companies that are trying to attract people to their stock will pay a lot more dividends. And so, you know, obviously, that’s been an area that has really improved as the economy has started to reopen, or even thought about reopening, which started on 11 9, when that announcement happened. If you go through all of these value portfolio, you’ll see this big jump here and you’ll see a similar pattern of gains that come from, you know, that point forward. So yeah, that’s that’s kind of what you’re seeing in there.