By Ambrose O’Callaghan
Canadian investors are wrestling with a changing investment climate in the first half of the 2020s. The Great Recession of 2007-2009 introduced an era of low interest rates and aggressive monetary aid from central banks. The technology sector has provided high returns and been among the best performing sectors in the past decade. While the new environment will present new challenges, the technology sector still offers terrific benefits compared to other sectors going forward.
Large capitalization (large cap) technology is a market growth leader that is well-positioned to remain very profitable through the 2020s. Moreover, this is a sector that will benefit from high levels of innovation and growth. This trajectory should attract Canadian investors to the Harvest Tech Achievers Growth & Income ETF (TSX:HTA).
The stocks that compose the HTA ETF have delivered high growth over the past decade. Moreover, many of these tech stocks have also achieved dividend-growth streaks over the past decade. That is why the HTA ETF is a good option for investors who are also hungry for monthly income. The covered call strategy allows this tech ETF to offer a high-yield monthly distribution. This can satisfy investors who want exposure to the tech sector.
Here’s why the tech sector can work in the current climate
There are several developments that should excite investors who own a Canada tech ETF. The HTA ETF offers exposure to technology subsectors like software, communications equipment, interactive media and services, IT services, and others.
Artificial intelligence (AI) has soaked up significant attention in the tech space, especially with the introduction of sophisticated chatbots like ChatGPT and some of its competing offshoots in late 2022 and through 2023. PWC recently projected that AI would contribute $15.7 trillion to the global economy by 2030. Moreover, PWC estimates that this subsector will lead to a 26% increase in GDP for local economies by the end of the forecast period.
Cisco Systems is the heaviest weighted HTA stock by a small margin at the time of this writing. On September 22, Cisco announced the acquisition of Splunk Inc. This move provides exposure to AI development and cyber security, another fast-growing subsector that you can invest in through this technology ETF.
What kind of total return has the HTA ETF delivered?
The HTA ETF has climbed 30% year-to-date at October 31, 2023. It has delivered an annualized return of 15% over the past five years. These returns should make investors happy, but this only tells you half the story.
This ETF currently offers a monthly distribution of $0.12 per share. That represents a current yield of 9.5% at the time of this writing. Since its inception, the HTA ETF has paid out a total distribution of $6.9911 per share!
How to choose the right tech ETF
Before you choose a tech ETF, it is important to determine your investment objective. That includes your investment horizon and risk tolerance. How has the tech ETF performed? The HTA ETF has delivered strong capital appreciation since its inception. What kind of stocks make up the ETF? The HTA ETF offers exposure to 20 large capitalization global technology stocks.
This tech ETF stock price last closed at $14.23 on October 31. However, when we account for its market price plus cumulative cash distributions, we see its value at $19.75 per share. This illustrates the true value of the growth and income tech ETF.
Ambrose O’Callaghan is the Content Editor at Harvest ETFs. Ambrose brings over a decade of experience in the financial services industry to the Content Editor role. He is responsible for providing context to current trends, developments, and analyses to help make sense of the ETF market and emerging themes. With a strong knowledge of the Canadian equity markets and Harvest products, Ambrose regularly provides commentary on a broad array of market topics.