Some popular dividend ETFs also carry high Morningstar ratings, including the $1.2 billion WisdomTree Dividend ex-Financials Fund (NYSEArca: DTN), which is a four-star ETF.
As its name implies, DTN excludes the financial services sector from its lineup. Although that sector has rebound from the dark days of 2008 and has gotten back to dividend growth over the past several years, DTN has not been hindered by excluding bank stocks. Since the March 2009 market bottom, DTN has returned nearly 314% while the best performance among the four largest U.S. dividend ETFs over that period has been a 256.3% gain.
Investors can also find highly-rated strategic beta sector ETFs as four of First Trust’s nine AlphaDEX sector ETFs carry five-star ratings from Morningstar. That group includes the $1.38 billion First Trust Consumer Staples AlphaDEX Fund (NYSEArca: FXG) and the $889.5 million First Trust Financial AlphaDEX Fund (NYSEArca: FXO), two ETFs that are among this year’s top performers from their respective sectors.
“While past performance may not tell you everything you need to know, it can be a useful data point among others in a more comprehensive analysis. In contrast to the historical performance rating, the Morningstar Analyst Rating is based on a five-pillar framework that evaluates a fund’s prospects. These pillars include Price, People, Parent, Process, and Performance. Investors should evaluate the suitability of a fund in the context of their portfolio and their investing objectives,” adds Morningstar.
WisdomTree Dividend ex-Financials Fund
Tom Lydon’s clients own shares of DTN.