SMDV is somewhat sensitive to changes in interest rates by way of an almost 27% weight to the utilities sector, but the fund combats that with a 21.6% weight to financial services names. While financials have been an important source of U.S. dividend growth in recent years, but small caps from that sector offer an advantage when rates rise because they are highly levered to profit-boosting increases in net interest margin. [Small Bank, Financial ETFs Could Capitalize on Looser Regulations]

For the five years ended Dec. 31, 2014, Russell 2000 dividend growers delivered return on equity of 13.4%, 360 basis points ahead of non-dividend growers, according to ProShares data. The index’s dividend growers also delivered EPS growth of 6.2% compared to 6% for non-dividend growers.

ProShares Russell 2000 Dividend Growers ETF

Tom Lydon’s clients own shares of IWM.