Technology companies differ from every other sector of the stock market. Unlike traditional stock market sectors that have already reached maturity, the tech sector is only halfway through its maturation cycle. Going forward the emphasis will shift away from companies that create entirely new product lines towards those that take existing product lines and enhance their functionality via the process of innovation.
This has very significant implications, as the tech sector will begin to consolidate leaving in its wake clearly distinct sets of winners and losers. The losers will either disappear altogether, or be consumed by their better capitalized competitors as innovation converges on its logical endpoints. Those companies left standing will become "the utility stocks of tomorrow", paying out a reliable stream of healthy dividends while delivering steady growth with minimal volatility.
Investors waiting for the "next Microsoft" or "next Apple" will be left behind, as those market leading companies have already assumed positions of financial domination that cannot be usurped by startups or competitors with significantly less cash. Any undersized competitor that comes along with a better product or feature will simply be acquired or integrated into one of these market behemoths. In other words, the market leading tech companies of tomorrow will come out of the pool of companies that exist today.
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First Trust NASDAQ Techonology Dividend (TDIV) is a component of the D2 Capital Management Multi-Asset Income Portfolio. It currently has a 2.43% yield (as of 16 December 2013).
The views expressed here are that of myself or the cited individual or firm and do not constitute a recommendation, solicitation, or offer by myself, D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.
The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville. The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.
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