FLQL: The Steady Income Play Riding the Tech Wave

The Franklin U.S. Large Cap Multifactor Index ETF (FLQL) is a rare breed in the ETF world: it combines the stability of consistent dividend payouts with exposure to high-growth sectors like Information Technology. As markets grapple with volatility, FLQL offers investors a compelling blend of income and capital appreciation potential—all wrapped in a low-cost, factor-driven strategy. Here's why it's worth a closer look now.

The Dividend Track Record: Steady as She Goes

Over the past decade, FLQL has paid dividends in 9 out of 10 years, with its forward yield currently sitting at 1.17%—a modest but reliable income stream in an era of rising rates. While the payout has fluctuated (e.g., a -4.56% drop in 2022 and a -7.26% decline in 2024), these dips are minor compared to the broader market's volatility. The next dividend, projected for June 2025 at $0.1329, continues this trend of steady, if not explosive, growth.

Crucially, FLQL's dividend stability isn't accidental. The ETF targets large-cap blend stocks with a multi-factor tilt toward quality, value, momentum, and low volatility. This approach filters out the noisier names, ensuring the portfolio holds companies with sustainable earnings—think Apple (AAPL), Microsoft (MSFT), and NVIDIA (NVDA), which together make up nearly 7% of FLQL's holdings.

Sector Allocations: Full Throttle into Tech

FLQL's 30.6% allocation to the Information Technology sector is its crown jewel. This isn't just a bet on FAANG stocks; the ETF dives deeper into software, AI infrastructure, and cloud computing—areas where growth remains robust. For example, Salesforce's Agentforce platform (a highlight in Q2 2025 reports) exemplifies how software companies are monetizing AI, a trend FLQL is positioned to capitalize on.

Compare this to market-cap-weighted peers like IVV or VOO, which also hold tech giants but lack FLQL's factor-driven edge. The ETF's focus on quality and value means it avoids overvalued small-cap tech darlings, instead favoring proven winners with pricing power. This balance has helped FLQL outperform during tech corrections, such as the Q1 2025 dip in software stocks.

Why Now? The Tech Growth Tailwind

The Q2 2025 Asset Allocation Quarterly report underscores a key theme: AI monetization is accelerating. Software companies, now trading at discounts to large-cap peers, could see revenue surges as AI models like DeepSeek's open-source solutions slash development costs. FLQL's top IT holdings—AAPL, MSFT, NVDA—are at the forefront of this shift, with AI-driven products (e.g., Azure's cloud AI tools) already boosting margins.

Meanwhile, FLQL's defensive tilt isn't ignored. Its 12.2% healthcare exposure and 12.47% in consumer discretionary provide ballast, while its 0.15% expense ratio keeps costs low. Even in a potential recession, the ETF's focus on dividend-paying stalwarts and secular tech trends should limit downside.

The Bottom Line: Income Meets Innovation

FLQL isn't a high-yield ETF—it's a strategic income generator for investors who want growth without gambling. With a decade of consistent payouts, a fortress balance sheet (99.69% U.S.-focused holdings), and a front-row seat to the AI revolution, it's a rare ETF that doesn't force investors to choose between income and innovation.

If you're looking for a way to ride tech's next wave while collecting steady U.S. dollar-denominated dividends, FLQL deserves a spot in your portfolio. The ETF's factor-driven strategy and sector allocations are primed to navigate 2025's uncertainties—and investors who act now could catch the next leg of AI-driven growth.

Act now before the tech rally leaves you behind.