What are the New Tech Stocks of 2018 and Beyond?
Investors have scratched their heads for years over which tech companies to invest in. Rather, they should dig deeper into what's fueling growth in the tech sector itself, tracing those roots to ETFs to help reap the rewards.


What are the new tech stocks of 2018 and beyond? Guess what — no one knows! If I was asked to pick a single technology stock a year ago, it would have been like finding a needle in a haystack. And I’m the CEO of an ETF company!
Instead, there’s a better way to determine where to direct your investment dollars. Rather than picking a particular company to invest in, pick a technology itself. Or, more specifically, an industry within the tech sector, one on which the entire field relies. More on what that might be in a bit.
First, there’s no getting around the fact that technology companies now dominate the stock market. Below is a chart showing the top 25 companies in the S&P 500 index. You’ll notice that five tech companies now occupy the top five slots and eight of the top 25 are technology companies — compared with 20 years ago, when just two of the top five were tech and only five tech companies were in the top 25.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The Changing Face of Technology in the S&P 500
S&P Market Cap Leaders | |||
---|---|---|---|
1998 | April 2018 | ||
1. | Microsoft | 1. | Apple |
2. | General Electric | 2. | Amazon.com |
3. | Intel | 3. | Microsoft |
4. | Walmart | 4. | Alphabet |
5. | ExxonMobil | 5. | |
6. | Merck & Co Inc | 6. | Berkshire Hathaway |
7. | International Business Machines | 7. | JPMorgan Chase & Co |
8. | Nokia of America | 8. | Johnson & Johnson |
9. | Coca-Cola | 9. | Exxon Mobil |
10. | Pfizer | 10. | Bank of America |
11. | Cisco Systems | 11. | Walmart |
12. | Bristol-Myers Squibb | 12. | Visa |
13. | AT&T | 13. | Wells Fargo & Co |
14. | WorldCom | 14. | Intel |
15. | Altria Group | 15. | Chevron |
16. | Procter & Gamble | 16. | UnitedHealth Group |
17. | Citigroup | 17. | Pfizer |
18. | Johnson & Johnson | 18. | Cisco Systems |
19. | AT&T | 19. | Home Depot |
20. | Bank of America | 20. | Verizon Communications |
21. | American International Group | 21. | AT&T |
22. | Eli Lilly & Co | 22. | Boeing |
23. | BellSouth | 23. | Oracle |
24. | Dell | 24. | Mastercard |
25. | JPMorgan Chase & Co | 25. | Coca-Cola |
It’s clear that technology is much more pervasive than it was just 20 years ago. Amazon is now the nation’s largest retailer, though it’s considered a tech company; and Visa and Mastercard are now among the largest purveyors of financial transactions, and are increasingly investing in technology for record keeping, fighting fraud and speeding up transactions. Technology, alas, is in everything.
Which industries within technology
Blockchain technology, cloud computing, semiconductors, video games, software and the “Internet of Things” are now eternally locked together and rely on technologies that couldn’t exist without each other. It’s hard to invest in just one industry within tech, but I would prefer to allocate my money in just two or three of those industries within the broader technology sector. Investing in exchange-traded funds (ETFs) allows me to do so.
For the next year, if I had to pick technology stocks, I would probably choose three tech realms to invest in:
- Blockchain technology
- Semiconductors
- Quality technology companies that pay dividends
My investments would not be in individual companies, but rather a basket of technology stocks, like an ETF, allowing me to gain exposure to one slice of the tech sector while diversifying my investments across many companies.
How dividends can help identify tech stocks that are poised for growth
Disappointingly, of the top five tech companies, only Apple and Microsoft pay dividends. Still, 20 years ago none of those companies paid dividends. To some extent, paying dividends is the sign of a company maturing and one that wants to reward investors for investing with the company. I see dividends as a significant indicator of a company’s health and growth.
Apple began paying dividends in 2012 and has been consistently making and growing quarterly cash dividend payments to shareholders. Apple’s annual dividend yield is currently 1.6%. Likewise, Microsoft has routinely paid a quarterly dividend that yields 1.7% today.
At Reality Shares, we feel that screening for quality in tech is paramount, and our proprietary dividend health rating system, DIVCON®, allows us to screen for dividend growth prospects. We evaluate each firm based on seven quantitative factors — expected dividend growth, free cash flows, earnings per share growth, recent dividend actions, buybacks and repurchases, fundamentals (according to Bloomberg) and Altman Z-scores (which measure credit strength) — to rank each company by its quality-based dividend health score.®
Why those 3 slices of technology?
Analyzing a company’s dividend growth is just one method helping identify the three sectors of technology that I believe are poised for growth. Another is the methodology that our blockchain ETF utilizes. First, I should point out that I believe that blockchain is one of the biggest innovations since the advent of the Internet. Blockchain is the underlying technology that bitcoin, a cryptocurrency, was built on, and it is the technology allowing for assets to be stored and transported over the Internet. It is a profound technology that is going to have broad, sweeping effects across all segments of the economy, regardless of what you’re looking at.
As to what we consider could be the next wave of technology, we also developed a screening system for companies in the blockchain space. A company gets a Blockchain ScoreTM that ranks its potential impact in this quickly growing market segment. These factors include the potential for increased economic profit, operational efficiencies and transformational business practices – analyzed to uncover the companies with the most potential within the blockchain economy. That is why the top-ranked Blockchain Scores include several of the tech companies, such as Intel, Amazon and Microsoft, which have the servers, microchips and technology that host blockchains.
Semiconductors are another one of the industries within technology that stands to gain from blockchain technology.
ETFs vs. mutual funds to get technology exposure
Could I get the same tech exposure by making my investments in anything but an ETF? Not really. Let me tell you why. For me, the only competing investments that would give me the right exposure and diversity are mutual funds. But mutual funds tend to fall short, in part, because they tend to charge higher fees and rely on active fund managers to pick the stocks, rather than basing them on indexes. Furthermore, if you planned on trading intraday, you wouldn’t be able to do so with mutual funds as they are only priced once a day, at the market close.
To summarize, there is no crystal ball to predict where technology is going to move, but there are ways of making sure your investments capture enough of the potential upside of whatever the next successful app or technology is likely to be.
Learn more about how we rank and analyze dividend-paying stocks or see how we rank companies investing in blockchain technologies using advanced analytics. Find important information and disclosures at http://www.realitysharesadvisors.com/.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Eric Ervin founded Reality Shares, a firm known for ETF industry innovation. He led the launch of investment analytics tools, including Blockchain Score™, a blockchain company evaluation system; DIVCON®, a dividend health analysis system; and the Guard Indicator, a directional market indicator. These tools were designed to help investors access innovative investment strategies as well as provide alternative dividend investment solutions to manage risk.
-
Silver Airways Shutdown Leaves Travelers Stranded — Here’s What to Know
The Florida-based airline abruptly ceased operations, disrupting routes across the Southeast and Caribbean. What frequent flyers need to know about refunds, rebooking and future travel plans.
-
Stock Market Today: Stocks Rise as Treasury Yields Drop
A round of not-too-terrible economic data helped boost the bond market Thursday.
-
A Financial Adviser's Defense of Annuities: They're Just Misunderstood
Annuities can offer retirement income stability and security against market volatility, though some do have drawbacks. The key is to understand their features before buying.
-
Diversification: An Investment Adviser's Guide to Why You Need It and How to Achieve It
How confident are you that your money will go the distance? Building a balanced portfolio can shore up your investments' long-term stability.
-
How My Dad Taught Me the Compounding Returns of Fatherhood
As Father's Day approaches, I remember how my father's small acts of love and generosity added up over time and influenced my relationships with my own children, proving that the best investments can grow across generations.
-
Financial Professional's Key to Peace of Mind in Retirement: Income Planning
Creating guaranteed income sources in retirement will help you truly enjoy your golden years and spend less time worrying about money.
-
Don't Let a Market Crash Crush Your Retirement
It's a comfort to know that with the right strategies, you can weather just about anything a crazy stock market can throw at you.
-
Wealth Advisers: In Estate Planning, the End Is Just the Beginning
We need to keep the lines of communication with our clients open so that we can anticipate and help them navigate issues that arise over time.
-
Stood Up by a Radio Show: But Was It a Breach of Contract?
A conscientious financial planner reschedules his clients after being invited onto a talk show and ends up losing one of them at a cost of $5,000. What does the radio show owe him, if anything?
-
Eight Estate Planning Steps to Protect Your Loved Ones (and Your Legacy)
Two-thirds of Americans don't have an estate plan. If you're one of them, these are the essential steps to take now to prevent problems for your family later.