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ETFs in Focus Post IBM's Q1 Revenue Miss, HashiCorp Deal
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After the closing bell on Apr 24, International Business Machines (IBM - Free Report) reported mixed first-quarter 2024 results. It beat estimates for earnings but missed the same for revenues. Disappointed by the revenue miss, IBM shares tumbled 8.3% in aftermarket hours. If the losses carry to the regular trading today, it would make for the stock's worst single-day percentage decline since it lost 9.6% on Oct 21, 2021.
This has put ETFs having the highest allocation to this tech giant in the spotlight. These funds are First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report) , FT Cboe Vest Technology Dividend Target Income ETF (TDVI - Free Report) , FT Cboe Vest DJIA Dogs 10 Target Income ETF (DOGG - Free Report) , Invesco Dow Jones Industrial Average Dividend ETF (DJD - Free Report) and Morningstar Dividend Leaders Index Fund (FDL - Free Report) .
Earnings per share came in at $1.68, surpassing the Zacks Consensus Estimate by 9 cents and improving 24% from the year-ago earnings. Revenues grew 1% year over year to $14.50 billion and fell short of the consensus estimate of $14.57 billion. The weaker-than-expected revenues were attributable to the deceleration in the company's consulting business. Consulting revenues were flat in the quarter, while software revenues grew 5% from the year-ago levels.
IBM reaffirmed its full-year guidance for mid-single-digit revenue growth for 2024.
HashiCorp Deal
In a race to tap into the AI boom, IBM agreed to buy a cloud software company, HashiCorp (HCP - Free Report) , for $35 per share in cash, or an enterprise value of $6.4 billion.
The acquisition will create a comprehensive hybrid cloud platform designed for the AI era, as HashiCorp has a proven track record of enabling clients to manage the complexity of today’s infrastructure and application sprawl. It will provide IBM access to HashiCorp’s roster of some 4,400 clients and will drive significant synergies across multiple strategic growth areas like Red Hat, watsonx, data security, IT automation and Consulting.
The transaction is expected to be accretive to adjusted EBITDA in the first full year after completion and free cash flow in year two (see: all the Technology ETFs here).
ETFs in Focus
First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report)
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 87 securities in its basket. Of these firms, IBM takes the second spot, making up 8% of the assets.
First Trust NASDAQ Technology Dividend Index Fund has amassed $2.2 billion in its asset base while trading in a volume of around 93,000 shares per day.
FT Cboe Vest Technology Dividend Target Income ETF (TDVI - Free Report)
FT Cboe Vest Technology Dividend Target Income ETF is an actively managed fund that seeks to provide a target level of current income and capital appreciation by holding a portfolio of dividend-paying U.S. technology companies. The fund utilizes a call writing option strategy on the Nasdaq 100 Index and/or the S&P 500 Index or related ETFs. It holds 87 securities in its basket, with IBM taking the top spot at 8% share.
FT Cboe Vest Technology Dividend Target Income ETF has accumulated $21.4 million in its asset base and trades in a volume of 18,000 shares per day on average. It charges 75 bps in annual fees.
FT Cboe Vest DJIA Dogs 10 Target Income ETF (DOGG - Free Report)
FT Cboe 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 sixth position at 6.7% share.
FT Cboe Vest DJIA Dogs 10 Target Income ETF has accumulated $29.7 million in its asset base and trades in a volume of 15,000 shares. It charges 75 bps in fees and expenses.
Invesco Dow Jones Industrial Average Dividend ETF (DJD - Free Report)
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 29 stocks in its basket, with IBM occupying the fourth position, accounting for 4.9%.
Invesco Dow Jones Industrial Average Dividend ETF has managed assets worth $293.1 million while trading in a volume of 18,000 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 - Free Report)
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 91 stocks in its basket, with IBM taking the seventh spot at 4.3% share (read: 5 Dividend ETFs to Buy as Market Volatility Rises).
With AUM of $3.9 billion, First Trust Morningstar Dividend Leaders Index Fund charges 45 bps in annual fees from investors and trades in a solid volume of about 740,000 shares a day. It has a Zacks ETF Rank #3 with a Medium risk outlook.
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ETFs in Focus Post IBM's Q1 Revenue Miss, HashiCorp Deal
After the closing bell on Apr 24, International Business Machines (IBM - Free Report) reported mixed first-quarter 2024 results. It beat estimates for earnings but missed the same for revenues. Disappointed by the revenue miss, IBM shares tumbled 8.3% in aftermarket hours. If the losses carry to the regular trading today, it would make for the stock's worst single-day percentage decline since it lost 9.6% on Oct 21, 2021.
This has put ETFs having the highest allocation to this tech giant in the spotlight. These funds are First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report) , FT Cboe Vest Technology Dividend Target Income ETF (TDVI - Free Report) , FT Cboe Vest DJIA Dogs 10 Target Income ETF (DOGG - Free Report) , Invesco Dow Jones Industrial Average Dividend ETF (DJD - Free Report) and Morningstar Dividend Leaders Index Fund (FDL - Free Report) .
Earnings per share came in at $1.68, surpassing the Zacks Consensus Estimate by 9 cents and improving 24% from the year-ago earnings. Revenues grew 1% year over year to $14.50 billion and fell short of the consensus estimate of $14.57 billion. The weaker-than-expected revenues were attributable to the deceleration in the company's consulting business. Consulting revenues were flat in the quarter, while software revenues grew 5% from the year-ago levels.
IBM reaffirmed its full-year guidance for mid-single-digit revenue growth for 2024.
HashiCorp Deal
In a race to tap into the AI boom, IBM agreed to buy a cloud software company, HashiCorp (HCP - Free Report) , for $35 per share in cash, or an enterprise value of $6.4 billion.
The acquisition will create a comprehensive hybrid cloud platform designed for the AI era, as HashiCorp has a proven track record of enabling clients to manage the complexity of today’s infrastructure and application sprawl. It will provide IBM access to HashiCorp’s roster of some 4,400 clients and will drive significant synergies across multiple strategic growth areas like Red Hat, watsonx, data security, IT automation and Consulting.
The transaction is expected to be accretive to adjusted EBITDA in the first full year after completion and free cash flow in year two (see: all the Technology ETFs here).
ETFs in Focus
First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report)
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 87 securities in its basket. Of these firms, IBM takes the second spot, making up 8% of the assets.
First Trust NASDAQ Technology Dividend Index Fund has amassed $2.2 billion in its asset base while trading in a volume of around 93,000 shares per day.
FT Cboe Vest Technology Dividend Target Income ETF (TDVI - Free Report)
FT Cboe Vest Technology Dividend Target Income ETF is an actively managed fund that seeks to provide a target level of current income and capital appreciation by holding a portfolio of dividend-paying U.S. technology companies. The fund utilizes a call writing option strategy on the Nasdaq 100 Index and/or the S&P 500 Index or related ETFs. It holds 87 securities in its basket, with IBM taking the top spot at 8% share.
FT Cboe Vest Technology Dividend Target Income ETF has accumulated $21.4 million in its asset base and trades in a volume of 18,000 shares per day on average. It charges 75 bps in annual fees.
FT Cboe Vest DJIA Dogs 10 Target Income ETF (DOGG - Free Report)
FT Cboe 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 sixth position at 6.7% share.
FT Cboe Vest DJIA Dogs 10 Target Income ETF has accumulated $29.7 million in its asset base and trades in a volume of 15,000 shares. It charges 75 bps in fees and expenses.
Invesco Dow Jones Industrial Average Dividend ETF (DJD - Free Report)
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 29 stocks in its basket, with IBM occupying the fourth position, accounting for 4.9%.
Invesco Dow Jones Industrial Average Dividend ETF has managed assets worth $293.1 million while trading in a volume of 18,000 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 - Free Report)
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 91 stocks in its basket, with IBM taking the seventh spot at 4.3% share (read: 5 Dividend ETFs to Buy as Market Volatility Rises).
With AUM of $3.9 billion, First Trust Morningstar Dividend Leaders Index Fund charges 45 bps in annual fees from investors and trades in a solid volume of about 740,000 shares a day. It has a Zacks ETF Rank #3 with a Medium risk outlook.