Some say this is the golden age of dividends. If that is true, dividend exchange traded funds are benefiting in a big way.
Last week, it was reported that assets under management at dividend ETFs reached a combined $80 billion. Not only is that up noticeably from $55 billion last year, it is more than the $67 billion found in U.S. Treasury ETFs. [Dividend ETFs: We’re Bigger Than U.S. Treasuries]
Year-to-date, the three largest U.S. dividend ETFs – the Vanguard Dividend Appreciation ETF (NYSEArca: VIG), the iShares Select Dividend ETF (NYSEArca: DVY) and the SPDR S&P Dividend ETF (NYSEArca: SDY) have raked in more than $5 billion in new assets. Those three ETFs rank among the 26 largest ETFs.
Hefty established ETFs have stood in the way of fund sponsors bringing new dividend fare to market. In fact, 12 ETFs with “dividend” in their names have already come to market this year, an average of better than one per month.
That group does not include bond funds, multi-asset ETFs or ETFs offering exposure to master limited partnerships. Here we look at 10 equity-based dividend funds that debuted this year that are worthy of further evaluation.
WisdomTree U.S. Dividend Growth Fund (NasdaqGS: DGRW)
AUM: $66.1 million
Performance since debut: Up 6.9%
Distribution yield: 1.72%
Comment: With an emphasis on future sources of dividend growth rather than backward-looking dividend increase streaks, DGRW could be an emerging dividend ETF titan. Importantly, DGRW is not as sensitive to rising interest as some of its older rivals as telecom and utilities names are not found in this new fund. Rather, DGRW is focused industrials, technology and consumer discretionary to the tune of 61% of the ETF’s weight. Those are not the most rate-sensitive sectors, but the latter two have been prodigious dividend raisers as of late. [ETFs for Dividend Growth]
WisdomTree Emerging Markets Dividend Growth Fund (NasdaqGS: DGRE)
AUM: $15.8 million
Performance since debut: up 2.2%
30-day SEC yield: 1.99%
Comment: Take the dividend growth concept that underlies DGRW, apply it to emerging markets and DGRE is the result. The fund debuted in early August. Brazil, South Africa, Russia, Indonesia and Thailand all receive double-digit weights at the country level. [Dividend Growth the Emerging Markets Way]
ALPS International Sector Dividend Dogs ETF (NYSEArca: IDOG)
AUM: $54.5 million
Performance since debut: Up 16.8%
Index trailing 12-month yield: 5.35%
Comment: IDOG is the international equivalent of the ALPS Sector Dividend Dog ETF (NYSEArca: SDOG), which applies the ‘Dogs of the Dow Theory’ on a sector-by-sector basis. IDOG, which charges 0.5% per year, tracks the S-Network International Sector Dividend Dogs Index.
EGShares EM Dividend High Income ETF (NYSEArca: EMHD)
AUM: $1 million
Performance since debut: Up 5.8%
Index dividend yield: 6.68%
Comment: EMHD tracks the FTSE Equal Weighted Emerging All Cap ex Taiwan Diversified Dividend Yield 50 Index, which is designed to deliver a broad basket of securities across emerging market countries that have been screened for high dividend yields. Brazil, China and South Africa combine for over 57% of EMHD’s country weight.
ProShares S&P 500 Aristocrats ETF (NYSEArca: NOBL)
Comment: At just three weeks old, the ProShares S&P 500 Aristocrats ETF is the newest member of this list, so judging asset-gathering proficiency and performance at this point might be a tad hasty. The S&P 500 Dividend Aristocrats Index, which requires a dividend increase streak of at least 25 years for membership, has a yield of 2.57% and 54 holdings as of August 31, according to ProShares data.
No stock accounts for more than 2.03% of the index’s weight. NOBL is part of the expanding lineup of ProShares ETFs that are NOT inverse or leveraged plays and with these being gilded days for dividends, NOBL could be one ETF with impeccable timing.
NOBL’s index has a 23.7% weight to staples while industrials, materials, health care, consumer discretionary and financials also get double-digit allocations.
Global X SuperDividend ETF (NYSEArca: DIV)
AUM: $52.1 million
Performance since debut: up 2.8%
Yield: 6.69% 30-day SEC yield
Comment: The Global X SuperDividend ETF has attracted interest among dividend-oriented investors since it started trading on March 11. Unlike the similar and older Global X SuperDividend ETF (NYSEArca: SDIV), which has a 6.51% 30-day SEC yield, DIV only tracks U.S. dividend stocks. DIV also has a heavy tilt toward typical high-yield areas, like mortgage-backed real estate investment trusts at 18.7% of the ETF and master limited partnerships at 14.0%.
RevenueShares Ultra Dividend Fund (NYSEArca: RDIV)
AUM: $5.3 million
Performance since debut: up 6.6%
Yield: N/A
Comment: The RDIV is a recent addition to the ETF family, launching on October 1. The fund tracks the top 60 stocks, ranked by the trailing 12-month yield, from the S&P 900, which is comprised of large-cap S&P 500 and S&P MidCap 400 stocks.
WisdomTree U.S. SmallCap Dividend Growth Fund (NYSEArca: DGRS)
AUM: $15.0 million
Performance since debut: up 9.9%
Yield: 1.2% 30-day SEC yield
Comment: Small-cap stocks typically outperforming the beginning stages of a market recovery. Additionally, investors are compensated as the ETF weights the companies based on dividends projections for the coming year. DGRS small-cap began trading on July 25.
SPDR S&P Global Dividend ETF (NYSEArca: WDIV)
AUM: $9.9 million
Performance since debut: up 9.6%
Yield: 3.35% 30-day SEC yield
Comment: The global reach helps investors diversify away from a typically U.S.-heavy portfolio. Moreover, dividend investors may also benefit from the higher yields that can be found in overseas markets. WDIV was launched on May 29.