In what can be considered a positive sign for the risk-on nature of the current rally in stocks, 23 U.S.-focused small-cap exchange traded funds hit all-time highs yesterday.

Proving that dividends are difference makers with small-cap ETFs, several of those all-time small stock funds were dividend ETFs, including the WisdomTree U.S. SmallCap Dividend Growth Fund (NasdaqGM: DGRS).

DGRS, the small-cap equivalent of the successful WisdomTree U.S. Dividend Growth Fund (NasdaqGM: DGRW), has climbed 3.9% year-to-date, but the ETF’s momentum is accelerating as highlighted by Wednesday’s move to an all-time high and a three-month gain of 8.2%.

DGRS tracks the WisdomTree U.S. SmallCap Dividend Growth Index, which is weighed by fundamental factors such as growth expectations, return on equity and return on assets, according to WisdomTree. Consumer discretionary and financial services are the ETF’s second- and third-largest sector weights, respectively. That is an important point because those two sectors are expected to be the only groups that post double-digit dividend growth this year. [Slow Q1 for Dividend Increases]

“While S&P Capital IQ has analysis on a smaller percentage of DGRS’s assets, most of the stocks seem fairly valued and have average S&P Capital IQ Quality Rankings. However, the ETF is trading with bullish technical patters. DGRS has a 0.38% net expense ratio,” said S&P Capital IQ.

The research firm has an overweight rating on DGRS.

Speaking of dividend growth, that is exactly what small-caps have been delivering and that bodes well for investors willing to take a long-term view of DGRS.

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