ETFs in Focus as IBM Reports Mixed Q3 Results

After the closing bell on Oct. 23, International Business Machines IBM reported mixed third-quarter 2024 results. It beat estimates for earnings but lagged the same for revenues. IBM shares slipped as much as 8% in aftermarket hours following the results and tumbled more than 4% in pre-market trade today at the time of writing. 

ETFs with the highest allocation to this tech giant have been in focus. These funds are First Trust NASDAQ Technology Dividend Index Fund TDIV, FT Vest Technology Dividend Target Income ETF TDVI, FT Vest DJIA Dogs 10 Target Income ETF DOGG, Invesco Dow Jones Industrial Average Dividend ETF DJD and Morningstar Dividend Leaders Index Fund FDL.

IBM’s earnings per share came in at $2.30, surpassing the Zacks Consensus Estimate of $2.27 and improving from the year-ago earnings of $2.20. Revenues grew 2% year over year to $14.97 billion but fell short of the consensus estimate of $15.19 billion. Consulting revenues were flat from the year-ago quarter, while software revenues grew 10%. 

IBM continues to focus on expanding its artificial intelligence (AI) capabilities, with the generative AI business now accounting for $3 billion in bookings, up from $2 billion in the previous quarter (see: all the Technology ETFs here).

IBM expects fourth-quarter sales to grow at a similar rate to the third quarter. It also maintained its forecast for free cash flow of $12 billion for the full year.

ETFs in Focus

First Trust NASDAQ Technology Dividend Index Fund (TDIV)

First Trust NASDAQ Technology Dividend Index Fund provides exposure to dividend payers within the technology and telecommunication sector by tracking the Nasdaq Technology Dividend Index. It charges 50 bps in annual fees and holds about 86 securities in its basket. Of these firms, IBM takes the third spot, making up 8.9% of the assets.

First Trust NASDAQ Technology Dividend Index Fund has amassed $2.9 billion in its asset base while trading in a volume of around 97,000 shares per day. 

FT Vest Technology Dividend Target Income ETF (TDVI)

FT Vest Technology Dividend Target Income ETF is an actively managed fund that seeks to invest in U.S. securities contained in the Nasdaq Technology Dividend Index and utilize an "option strategy" consisting of writing(selling) call options on the Nasdaq-100 Index and/or the S&P 500 Index, or ETFs that track the Nasdaq-100 Index or the S&P 500 Index. It holds 86 securities in its basket, with IBM taking the top spot at 8.9% share. 

FT Vest Technology Dividend Target Income ETF has accumulated $41.4 million in its asset base and trades in a volume of 17,000 shares per day on average. It charges 75 bps in annual fees. 

FT Vest DJIA Dogs 10 Target Income ETF (DOGG)

FT Vest DJIA Dogs 10 Target Income ETF seeks to provide current income with a secondary objective of providing capital appreciation. It provides exposure to the "Dogs of the Dow," the 10 highest dividend-yielding stocks in the Dow Jones Industrial Average on an annual basis. DOGG holds 41 stocks in its basket, with IBM occupying the second position at 5.7% share. 

FT Vest DJIA Dogs 10 Target Income ETF has accumulated $36.1 million in its asset base and trades in a volume of 16,000 shares. It charges 75 bps in fees and expenses. 

Invesco Dow Jones Industrial Average Dividend ETF (DJD)

Invesco Dow Jones Industrial Average Dividend ETF offers exposure to dividend-paying companies included in the Dow Jones Industrial Average by their 12-month dividend yield over the prior 12 months. It holds 28 stocks in its basket, with IBM occupying the fifth position, accounting for 5.7% (read: ETFs to Tap as Dow Scales New Highs). 

Invesco Dow Jones Industrial Average Dividend ETF has managed assets worth $319.7 million while trading in a volume of 14,000 shares a day on average. It charges 7 bps in annual fees and has a Zacks ETF Rank #3 (Hold).

First Trust Morningstar Dividend Leaders Index Fund (FDL) 

First Trust Morningstar Dividend Leaders Index Fund offers exposure to stocks that have shown the highest dividend consistency and dividend sustainability by tracking the Morningstar Dividend Leaders Index. It holds 100 stocks in its basket, with IBM taking the sixth spot at 4.8% share.

With AUM of $4.5 billion, First Trust Morningstar Dividend Leaders Index Fund charges 45 bps in annual fees from investors and trades in a solid volume of about 401,000 shares a day. It has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

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