Dividend Payer: This ETF Has an Attractive Dividend and Strong Growth Potential
With an annual yield over 9.5% and rooted in a rapidly evolving sector, this ETF is has been on my watchlist for quite some time.
Virtus Artificial Intelligence & Technology Opportunities Fund (AIO)
One of my favorite income earning ETFs with upside potential on the shares is Virtus Artificial Intelligence & Technology Opportunities Fund (AIO). It has been on my watchlist since before I started publishing Morning Watchlist because is such a compelling option for those looking to tap into the growing AI and technology sectors while enjoying a high yield. However, it is essential to be mindful of the volatility that the technology sector can often bring from one market cycle to the next.
Firstly, AIO is a relatively young fund, having been established in October 2019, but it has quickly made a name for itself by focusing on sectors poised for significant growth. This fund is managed by Virtus Investments Partners and leverages advancements in artificial intelligence and technology, investing primarily in companies that are at the forefront of these transformative industries. Anyone who has talked with me about this sector has heard me say many times that I believe we are at the very beginning of new industrial revolution of sorts. This focus allows the fund to capture the potential of some of the most innovative and rapidly evolving sectors in the market.
One of the key attractions of AIO is its dividend yield. Currently, the fund offers a yield of approximately 9.6%, which is particularly appealing for income-minded investors. This high yield is a combination of income from dividends and capital gains. For investors, this blend of income and growth potential is a major draw.
As of May 24,2024, the funds closing price was $19.96 an increase of 15.51% year-to-date. The tope holdings in AIO’s portfolio include companies that are on the leading edge of AI developments or stand to benefit from them. Companies such as Microsoft, Apple, NVIDIA, Amazon, and Alphabet make up some of the top holdings for their innovation, financial strength, and dominant market positions and as such, provide a rather solid foundation for the fund’s performance.
On a technical level, the fud is trading above its key moving averages, which indicates a strong upward trend. Additionally, the MCAD (Moving Average Convergence Divergence) reinforces its bullish momentum. This is where you need to keep watching it however: because the Relative Strength Index (RSI) suggests that it may be reaching an overbought level so it is possible that we may be seeing a pullback. It that is that case, there may be an opportunity to increase your yield potential. In spite of this indicator, the overall outlook remains positive in my opinion.
Like all investments, AIO comes with a set of risks, These include Market risk, sector concentration risk, interest rate risk and the risks associated with leverage and option writing as that may be part of the fund strategy. The funds performance is tied to the overall market conditions and the specific sector it invests in. Changes in interest rates can impact the cost of leverage and the fud’s volatility. Option writing, while it may help to generate additional income, can also limit the upside potential of the fund’s holdings.
AIO is certainly worth considering but as always, it is crucial to be mindful of the risks involved when investing and I always encourage you to speak with a financial professional before making an y investing decisions.
Overview: Virtus Artificial Intelligence & Technology Opportunities Fund (AIO)
AIO is a closed-end fund that aims to provide a mix of current income, current gains, and long-term capital appreciation. The fund specifically targets investments in the technology and AI sectors, capitalizing on rapid advancements in these fields.
Fund Details
· Inception Date: October 31, 2019
· Fund Manager: Virtus Investment Partners
· Market Capitalization: $644.24 Million
· Dividend Yield: 9.59%
· Net Income: $85.43 Million
· Shares Outstanding: Approximately 34.34 Million
Strategy
AIO employs a multi-faceted investment approach, including investing in equities, convertible securities, and option writing.
Current yield and Dividends
AIO offers a dividend of about 9.59%. The fund pays an annual dividend or $1.80 per share, with the most recent dividend being declared in April 2024.