After the closing bell on Wednesday, International Business Machines (IBM - Free Report) posted mixed first-quarter 2019 results wherein it beat the earnings estimate and missed on revenues.
Earnings per share came in at $2.25, well above the Zacks Consensus Estimate of $2.21 but below the year-ago earnings of $2.45. Revenues fell 4.7% year over year to $18.18 billion and missed the estimated $18.52 billion (see: all the Technology ETFs here).
A shift toward faster-growing segments such as cloud, software and services from traditional hardware products under chief executive officer, Ginni Rometty, is paying off. Most analysts believe that the ongoing growth of the Strategic Imperatives unit will help IBM return to organic growth in 2019.
The world’s largest computer-services provider reiterated its full-year earnings projection of “at least $13.90” a share.
Based on mixed results, shares of IBM fell nearly 3% in after-market hours on elevated volume. The stock has a Zacks Rank #4 (Sell) but boasts a solid Value Score of B. It also belongs to a top-ranked Zacks industry (top 29%).
ETFs to Watch
Given this, ETFs with the highest allocation to this tech giant will be in focus. Investors should closely monitor the movement in these funds and tap the opportunity whenever it arises or avoid if the stock drags them down in the coming days:
First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report)
This fund provides exposure to dividend payers within the technology sector by tracking the Nasdaq Technology Dividend Index. The product has amassed about $995.5 million in its asset base while trading in volume of around 121,000 shares per day. It charges 50 bps in annual fees and holds about 93 securities in its basket. Of these firms, IBM takes the fourth spot, making up roughly 7.9% of the assets (read: A Bunch of Dividend ETFs Hitting All-Time Highs).
Invesco Dow Jones Industrial Average Dividend ETF (DJD - Free Report)
This ETF offers exposure to high-yielding 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 top position with 6.3% allocation. DJD has been able to manage assets worth $73.8 million, while trading in volume of 74,000 shares a day on average. It charges 7 bps in annual fees and has a Zacks ETF Rank #3 (Hold) (read: 4 Reasons to Bet on Dow Jones ETFs in Q2).
WBI Power Factor High Dividend ETF (WBIY - Free Report)
This ETF offers exposure to quality stocks that have the highest dividend yield with a deep value bias and multi-factor fundamental analysis. It follows the Solactive Power Factor High Dividend Index, holding 51 stocks in the basket, with IBM taking the second spot at 5.5%. The product has amassed $123.7 million in its asset base and trades in a lower volume of 46,000 shares a day on average. It charges 70 bps in annual fees.
Schwab U.S. Dividend Equity ETF (SCHD - Free Report)
With AUM of $9.3 billion, this product offers exposure to 111 high dividend yielding U.S. companies that have a record of consistent dividend payments supported by fundamental strength based on financial ratios and ample liquidity. This can be easily done by tracking the Dow Jones U.S. Dividend 100 Index. IBM occupies the seventh position in the basket, with 4.4% of the portfolio. The fund trades in solid volume of 1.3 million shares a day and is one of the low-cost choices in the dividend space, charging 6 bps in fees per year. It has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Is Market Overvalued? 5 Cheap Top-Ranked ETFs to Play).
Tortoise Cloud Infrastructure Fund
This ETF offers exposure to companies that have the potential to benefit from the expected growing investments, rapid adoption and fast-paced innovation of the cloud industry by tracking the Tortoise Global Cloud Infrastructure Index. It holds 45 securities in its basket, with IBM taking the seventh spot at 4.45% share. TCLD has been able to gather $2.8 million in its asset base since its debut in January and sees lower volume of nearly 3,000 shares. It charges 40 bps in annual fees (read: Cloud Computing ETF Space Gets Crowded).
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