ETF Research written by the Barchart.com ETF Research Team

Last Updated: December 20, 2011

Table of Contents

1. Introduction
2. U.S. Dividend-Focused ETFs
3. U.S. Mid-cap and Small-Cap Dividend ETFs
4. Global Dividend-Focused ETFs
5. Specific Global Countries/Regions
6. Global Small-Cap and Mid-Cap Dividend ETFs

Introduction

Investors during the in recent years of turmoil in the stock market have been attracted to dividend stocks.  Dividend stocks tend to be more stable investments since companies that pay relatively high dividends tend to be older and more mature cash cows that pay out cash to investors in the form of dividends, as opposed to riskier and newer companies that are still in a heavy investment phase.

The two main advantages of exchange-traded funds that hold dividend stocks are diversification and stock selection.  Dividend ETFs provide an easy and relatively inexpensive way for an investor to hold a portfolio of dividend stocks by buying just one investment vehicle.  In addition, global dividend ETFs provide a way for U.S. investors to gain access to attractive global dividend stocks by buying a single U.S.-listed security that is denominated in dollars.  The ETF fund takes care of stock selection as well as the foreign exchange intricacies of holding foreign stocks.

We will now provide a quick description of the various dividend ETFs broken out into various categories.  We will also show the dividend yield for each ETF, which is simply defined as the trailing annual dividend divided by the current ETF price.  The dividend yield is similar to a coupon on a bond and provides an indication of how much income an investor might receive by holding a dividend ETF.  However, it should be noted that while a dividend provides a nice boost for the total return on an investment, a negative capital gain on the stock or ETF can more than offset the dividend and end up causing a net loss on the investment.  Therefore, it is important to pick dividend ETFs that not only provide a high dividend but also provide a good chance for capital appreciation.

U.S. Dividend-Focused ETFs

iShares Dow Jones Select Dividend Index Fund (DVY) (issuer web site link) – This fund, launched in November 2003, has $8.4 billion in assets under management.  The fund has an expense fee of 0.40%.  The fund has a dividend yield of 4.09%.  The fund tracks the Dow Jones U.S. Dividend Index.  The fund holds 101 U.S.-listed stocks.  The five top holdings are:  Lorillard (4.0%), VF Corp (2.6%), Chevron (2.2%), Entergy (2.2%), and Kimberly Clark (2.0%).

Vanguard Dividend Appreciation ETF (VIG) (issuer web site link) – This fund, launched in April 2006, has $8.1 billion in assets under management.  The fund has an expense fee of 0.18%.  The fund has a dividend yield of 2.58%.  The fund tracks the Mergent Dividend Achievers Select Index.  The fund holds 127 U.S.-listed stocks.  The five top holdings are:  McDonalds (5.2%), International Business Machines (4.8%), Coca-Cola (4.8%), Procter & Gamble (4.4%), and Chevron (4.3%).  This fund tracks U.S. common stocks with a record of increasing dividends for at least ten consecutive years, excluding REITs and companies that might have low potential for dividend growth.

SPDR S&P Dividend ETF (SDY) (issuer web site link) – This fund, launched in November 2005, has $7.5 billion in assets under management.  The fund has an expense fee of 0.35%.  The fund has a dividend yield of 3.76%.  The fund tracks the S&P High Yield Dividend Index.  The fund holds 60 U.S.-listed stocks.  The five top holdings are:  Century Link (4.0%), Pitney Bowes (3.5%), Cincinnati Financial (3.3%), HCP (2.9%), and National Retail Properties (2.8%).

 Vanguard High Dividend Yield Index Fund (VYM) (issuer web site link) – This fund, launched in November 2006, has $2.1 billion in assets under management.  The fund has an expense fee of 0.18%.  The fund has a dividend yield of 3.57%.  The fund tracks the FTSE High Dividend Yield Index.  The fund holds 425 U.S.-listed stocks.  The five top holdings are:  Exxon Mobil (6.7%), Microsoft (4.0%), Chevron (3.5%), Johnson & Johnson (3.3%), and Procter & Gamble (3.3%).

WisdomTree Dividend ex-Financials Fund (DTN) (issuer web site link) – This fund, launched in June 2006, has $770 million in assets under management.  The fund has an expense fee of 0.38%.  The fund has a dividend yield of 4.36%.  The fund tracks the Wisdom Tree Dividend ex-Financials Index.  The fund holds 87 U.S.-listed stocks.  The five top holdings are:  Century Link (2.7%), Reynolds American (2.4%), First Energy (2.2%), Lorillard (2.2%), and Altria Group (2.1%).

 First Trust Morningstar Dividend Leaders Index Fund (FDL) (issuer web site link) – This fund, launched in March 2006, has $350 million in assets under management.  The fund has an expense fee of 0.45%.  The fund has a dividend yield of 4.57%.  The fund tracks the Morningstar Dividend Leaders Index.  The fund holds 100 U.S.-listed stocks.  The five top holdings are:  AT&T (9.8%), Verizon (8.9%), Johnson & Johnson (8.8%), Merck (7.9%), and Conoco Phillips (5.8%).

 First Trust Value Line Dividend Fund (FVD) (issuer web site link) – This fund, launched in August 2003, has $335 million in assets under management.  The fund has an expense fee of 0.70%.  The fund has a dividend yield of 3.70%.  The fund tracks the Value Line Dividend Index.  The fund holds 163 U.S.-listed stocks.  The five top holdings are:  Century Link (0.6%), Lowe’s (0.6%), Phillip Morris International (0.6%), Reynolds American (0.6%), and Emerson Electric (0.6%).

 WisdomTree Equity Income Fund (DHS) (issuer web site link) – This fund, launched in June 2006, has $295 million in assets under management.  The fund has an expense fee of 0.38%.  The fund has a dividend yield of 4.55%.  The fund tracks the Wisdom Tree Equity Income Index.  The fund holds 329 U.S.-listed stocks.  The five top holdings are:  AT&T (7.5%), Pfizer (5.0%), Chevron (4.9%), Johnson & Johnson (4.6%), and Verizon (4.5%).

PowerShares High Yield Equity Dividend Achievers Portfolio (PEY) (issuer web site link) – This fund, launched in December 2004, has $285 million in assets under management.  The fund has an expense fee of 0.60%.  The fund has a dividend yield of 4.76%.  The fund tracks the Mergent Dividend Achiever 50 Index.  The fund holds 50 U.S.-listed stocks.  The five top holdings are:  Century Link (4.0%), Pitney Bowes (3.1%), Mercury General (2.8%), Enterprise Products Partners (2.8%), and Altria Group (2.7%).

PowerShares Dividend Achievers Portfolio (PFM) (issuer web site link) – This fund, launched in September 2005, has $255 million in assets under management.  The fund has an expense fee of 0.60%.  The fund has a dividend yield of 3.12%.  The fund tracks the Broad Dividend Achiever Index.  The fund holds 189 U.S.-listed stocks.  The five top holdings are:  International Business Machines (5.2%), Johnson & Johnson (5.1%), AT&T (5.0%), Wal-Mart (4.9%), and Procter & Gamble (4.8%).

WisdomTree Total Dividend Fund (DTD) (issuer web site link) – This fund, launched in June 2006, has $190 million in assets under management.  The fund has an expense fee of 0.28%.  The fund has an expense fee of 0.60%.  The fund has a dividend yield of 3.53%.  The fund tracks the Wisdom Tree Dividend Index.  The fund holds 815 U.S.-listed stocks.  The five top holdings are:  AT&T (4.0%), Exxon (3.9%), Pfizer (2.6%), Chevron (2.6%), and Johnson & Johnson (2.5%).

U.S. Mid-cap and Small-Cap Dividend ETFs

WisdomTree offers a U.S. mid-cap ETF and small-cap ETF that focus on dividends.  Both of these funds have assets under management in excess of our recommended minimum of $50 million.  These funds are potentially attractive to investors who are looking for the extra boost in performance that is traditionally associated with small-cap and mid-cap stocks.

WisdomTree MidCap Dividend Fund (DON) (issuer web site link) – This fund, launched in June 2006, has $260 million in assets under management.  The fund has an expense fee of 0.38%.  The fund has a dividend yield of 3.87%.  The fund tracks the Wisdom Tree MidCap Dividend Index.  The fund holds 334 U.S.-listed stocks.  The five top holdings are:  NiSource (1.3%), Oneok (1.2%), Macerich (1.2%), Constellation Energy Group (1.1%), and Plum Creek Timber (1.1%).

WisdomTree SmallCap Dividend Fund (DES) (issuer web site link) – This fund, launched in June 2006, has $215 million in assets under management.  The fund has an expense fee of 0.38%.  The fund has a dividend yield of 4.86%.  The fund tracks the Wisdom Tree SmallCap Dividend Index.  The fund holds 566 U.S.-listed stocks.  The five top holdings are:  Vector (1.4%), UIL Holdings (1.2%), Prospect Capital (1.1%), Medical Properties Trust (1.0%), and Solar Capital (1.0%).

Figure 1:  Comparison of Largest U.S. Dividend ETFs (live chart link)



Our pick for a broad U.S. dividend ETF – Our pick for a broad U.S. dividend ETF is the Vanguard Dividend Appreciation ETF (VIG) based on its performance and its the low expense fee.  While there are three granddaddies in the U.S. dividend ETF group, each with $7-8 billion worth of assets under management, the Vanguard Dividend Appreciation ETF (VIG) has produced the best price performance in recent years by far, as seen in Figure 1. 

Vanguard’s VIG actually has one of the lowest dividend yields of the entire group at 2.58% versus 4.09% for iShares Dow Jones Select Dividend ETF (DVY) and 3.76% for the SPDR S&P Dividend ETF (SDY).  However, Vanguard’s VIG has produced much higher total returns than its main competitors despite its lower dividend yield because of the success of its selection methodology.  Vanguard’s VIG selects stocks based not on stocks with the highest dividend, but rather based on stocks that have shown an increase in their annual dividend over at least the last 10 years.  A progressively increasing dividend implies a company that is growing year after year and is boosting its cash flow and earnings, thus causing its stock price to move higher.  Vanguard’s VIG is based on a kind of hybrid selection methodology, i.e., not focusing exclusively on high dividends but using dividends as an indicator of stocks that have strong potential for appreciation.  We also like Vanguard’s VIG due to its low expense ratio of 0.18%, which is much lower than 0.40% for iShares’s DVY and 0.35% for SPDR’s SDY.

Global Dividend-Focused ETFs

iShares Dow Jones International Select Dividend Fund  (IDV) (issuer web site link) – This fund, launched in June 2007, has $645 million in assets under management.  The fund has an expense fee of 0.50%.  The fund has a dividend yield of 7.32%.  The fund tracks the Dow Jones EPAC Select Dividend Index.  The fund holds 102 globally-listed stocks.  The five top holdings are:  ENI Spa (5.0%), British American Tobacco (4.7%), Common Wealth Bank of Australia (4.5%), Royal Dutch Shell (4.0%), and SSE Plc (3.0%).

 SPDR S&P International Dividend ETF (DWX) (issuer web site link) – This fund, launched in February 2008, has $565 million in assets under management.  The fund has an expense fee of 0.45%.  The fund has a dividend yield of 11.21%.  The fund tracks the S&P International Dividend Opportunities Index.  The fund holds 101 globally-listed stocks.  The five top holdings are:  Tele2 (3.7%), Telefonica (3.4%), Asx Ltd (3.3%), Seven West Media (2.9%), and RWE (2.7%).

PowerShares International Dividend Achievers Portfolio (PID) (issuer web site link) – This fund, launched in September 2005, has $560 million in assets under management.  The fund has an expense fee of 0.58%.  The fund has a dividend yield of 5.06%.  The fund tracks the Mergent International Dividend Achievers Index.  The fund holds 64 globally-listed stocks.  The five top holdings are:  Partner Communications (5.8%), Telefonica (4.0%), Philippine Long Distance Telephone (3.3%), Teekay LNG Partners (3.2%), and National Grid (2.6%).

WisdomTree International Dividend ex-Financials Fund (DOO) (issuer web site link) – This fund, launched in June 2006, has $240 million in assets under management.  The fund has an expense fee of 0.58%.  The fund has a dividend yield of 7.22%.  The fund tracks the Wisdom Tree International Dividend ex-Financials Index.  The fund holds 91 globally-listed stocks.  The five top holdings are:  Telstra Corp (3.4%), Foster’s Group (2.5%), Belgacom (2.1%), Nokia (2.1%), and France Telecom (1.9%).

WisdomTree International LargeCap Dividend Fund (DOL) (issuer web site link) – This fund, launched in June 2006, has $120 million in assets under management.  The fund has an expense fee of 0.48%.  The fund has a dividend yield of 5.65%.  The fund tracks the Wisdom Tree International LargeCap Dividend Index.  The fund holds 210 globally-listed stocks.  The five top holdings are:  China Mobile (2.6%), Vodafone (2.5%), Nestle (2.1%), Telefonica (2.1%), and Total SA (2.0%).

First Trust Dow Jones Global Select Dividend Index Fund (FGD) (issuer web site link) – This fund, launched in November 2007, has $115 million in assets under management.  The fund has an expense fee of 0.60%.  The fund has a dividend yield of 6.85%.  The fund tracks the Dow Jones Global Select Dividend Index.  The fund holds 100 globally-listed stocks.  The five top holdings are:  Telecom Corp of New Zealand (2.4%), Telstra Corp Limited (2.2%), Bell Aliant (2.1%), Cable & Wireless Comm (1.7%), and Provident Financial (1.7%).

Guggenheim International Multi-Asset Income ETF (HGI) (issuer web site link) – This fund, launched in July 2007, has $80 million in assets under management.  The fund has an expense fee of 0.65%.  The fund has a dividend yield of 5.80%.  The fund tracks the Zacks International Multi-Asset Income Index.  The fund holds 147 globally-listed stocks.  The five top holdings are:  Penn West Petroleum (2.7%), Enerplus (2.5%), Sandridge Mississippian Trust (2.2%), Huaneng Power International (1.3%), and A.F.P. Provida SA-Spons (1.3%).

 WisdomTree Global Equity Income Fund (DEW) (issuer web site link) – This fund, launched in June 2006, has $65 million in assets under management.  The fund has an expense fee of 0.58%.  The fund has a dividend yield of 6.23%.  The fund tracks the Wisdom Tree Global Equity Income Index.  The fund holds 563 globally-listed.  The five top holdings are:  AT&T (2.0%), China Mobile (1.8%), Vodafone (1.7%), Telefonica (1.5%), and Total SA (1.4%).

Guggenheim S&P Global Dividend Opportunities Index ETF (LVL) (issuer web site link) – This fund, launched in June 2007, has $40 million in assets under management.  The fund has an expense fee of 0.60%.  The fund has a dividend yield of 11.33%.  The fund tracks the S&P Global Dividend Opportunities NR Index.  The fund holds 100 globally-listed stocks.  The five top holdings are:  Tele2 AB (3.5%), American Capital Agency (3.4%), Telef Brasil (3.3%), ASX Ltd (2.8%), and Orient Overseas International (2.5%).

Figure 2:  Comparison of Vanguard’s VIG and the Largest Global Dividend ETFs (live chart link)

Our pick for a global dividend ETF – Our pick for a global dividend ETF is the PowerShares International Dividend Achievers Portfolio (PID) mainly because of its superior recent performance relative to the other large global dividend ETFs, as seen in Figure 2.  PowerShares’ PID tracks the Mergent International Dividend Achievers Index, which comes from the same index company that provides the Mergent Dividend Achievers Select Index for Vanguard’s Dividend Appreciation ETF (VIG), our pick for a U.S. broad dividend ETF.  Mergent’s International Achievers Index takes a similar dividend growth approach, i.e., selecting global stocks that have paid increasing regular annual dividends for five or more consecutive years.   PowerShares’ PID has a dividend yield of 5.06% that is one of the lowest in the group, but the fund boasts a 5-year dividend growth rate of 9.2%.  That strong dividend growth has helped drive its superior stock price return performance.

Specific Global Countries/Regions

There are a variety of dividend ETFs that focus on specific countries and regions.  These ETFs combine the dividend investment theme with a targeted investment in the country or region of interest.  Most of these ETFs have assets under management in excess of our recommended minimum of $50 million.

WisdomTree DEFA High-Yielding Equity Fund (DTH) (issuer web site link) – This fund, launched in June 2006, has $135 million in assets under management.  The fund has an expense fee of 0.58%.  The fund has a dividend yield of 7.01%.  The fund tracks the Wisdom Tree DEFA Equity Income Index.  The fund holds 435 globally-listed stocks.  The five top holdings are:  China Mobile (3.1%), Vodafone (3.0%), Telefonica (2.6%), Total SA (2.5%), and GlaxoSmithKline (2.4%).

 WisdomTree DEFA Fund (DWM) (issuer web site link) – This fund, launched in June 2006, has $325 million in assets under management.  The fund has an expense fee of 0.48%.  The fund has a dividend yield of 5.67%.  The fund tracks the Wisdom Tree Dividend Index of Europe, Far Asia and Australia Index.  The fund holds 764 globally-listed stocks.  The five top holdings are:  China Mobile (1.9%), Vodafone (1.8%), Telefonica (1.6%), Total  (1.5%), and Nestle (1.5%).

 WisdomTree Emerging Markets High-Yielding Equity Fund (DEM) (issuer web site link) – This fund, launched in July 2007, has $1.9 billion in assets under management.  The fund has an expense fee of 0.63%.  The fund has a dividend yield of 6.78%.  The fund tracks the Wisdom Tree Emerging Markets Equity Income Index.  The fund holds 563 globally-listed stocks.  The five top holdings are:  Taiwan Semiconductor (4.0%), Cia de Bebidas das Americas (3.0%), Banco do Brazil (2.7%), Malayan Banking (2.4%), and Chunghwa Telecom (2.3%).

WisdomTree Australia Dividend Fund (AUSE) (issuer web site link) – This fund, relaunched in June 2011, has $50 million in assets under management.  Prior to June 17, 2011, the WisdomTree Australia Dividend Fund was named the WisdomTree Pacific ex-Japan Equity Income Fund. The fund has an expense fee of 0.58%.  The fund has a dividend yield of 7.62%.  The fund tracks the WisdomTree Australia Dividend Index.  The fund holds 68 Australian-listed stocks.  The five top holdings are:  Telstra (4.4%), Foster’s Group (3.4%), Metcash (3.1%), Myer Holdings (2.9%), and Westpac Banking Corp (2.8%).

WisdomTree Middle East Dividend Fund (GULF) (issuer web site link) – This fund, launched in July 2008, has $16 million in assets under management.  The fund has an expense fee of 0.88%.  The fund has a dividend yield of 7.65%.  The fund tracks the Wisdom Tree Middle East Dividend Index.  The fund holds 38 globally-listed stocks.  The five top holdings are:  Mobile Telecommunications (13.2%), Maroc Telecom (9.8%), AIM Short Term Investments (7.6%), Industries Qatar (7.2%), and Qatar National Bank (4.7%).

Global Small-Cap and Mid-Cap Dividend ETFs

There are a variety of small-cap and mid-cap dividend stocks provided by Wisdom Tree that focus on specific countries or regions.  These effectively combine three investment themes in a single ETF:  (1) dividends, (2) the higher potential growth of small-cap and mid-cap stocks, and (3) targeted country or regional growth.  Most of these ETFs have assets under management in excess of our recommended minimum of $50 million. A brief description of these ETFs follows.

WisdomTree Emerging Markets SmallCap Dividend Fund (DGS) (issuer web site link) – This fund, launched in October 2007, has $720 million in assets under management.  The fund has an expense fee of 0.63%.  The fund has a dividend yield of 5.42%.  The fund tracks the Wisdom Tree Emerging Markets SmallCap Dividend Index.  The fund holds 553 globally-listed stocks.  The five top holdings are:  Partner Comm (1.2%), Pretoria Portland Cement (1.0%), Farglory Land Development (0.9%), Cia de Saneamento de Minas Ger (0.8%), and Ratchaburi Electric Generat (0.8%).

WisdomTree International SmallCap Dividend Fund (DLS) (issuer web site link) – This fund, launched in June 2006, has $350 million in assets under management.  The fund has an expense fee of 0.58%.  The fund has a dividend yield of 5.27%.  The fund tracks the Wisdom Tree International SmallCap Dividend Index.  The fund holds 651 globally-listed stocks.  The five top holdings are:  Cable & Wireless Comm (0.7%), Provident Financial (0.7%), Vector (0.6%), Myer Holdings (0.6%), and David Jones (0.6%).

WisdomTree Japan SmallCap Dividend Fund (DFJ) (issuer web site link) – This fund, launched in June 2006, has $185 million in assets under management.  The fund has an expense fee of 0.58%.  The fund has a dividend yield of 2.81%.  The fund tracks the Wisdom Tree Japan SmallCap Dividend Index.  The fund holds 500 globally-listed stocks.  The five top holdings are:  Park24 (0.8%), Square Enix Holdings (0.6%), Century Tokyo Leasing (0.6%), Hikari Tsushin (0.5%), and Chiyoda (0.5%).

WisdomTree International MidCap Dividend Fund (DIM) (issuer web site link) – This fund, launched in June 2006, has $115 million in assets under management.  The fund has an expense fee of 0.58%.  The fund has a dividend yield of 5.57%.  The fund tracks the Wisdom Tree International MidCap Dividend Index.  The fund holds 502 globally-listed stocks.  The five top holdings are:  Foster’s Group (1.1%), Suncorp-Metway (0.8%), Leighton Holdings (0.7%), Coca-Cola (0.7%), and Portugal Telecom SGPS (0.7%).

WisdomTree Europe SmallCap Dividend Fund (DFE) (issuer web site link) – This fund, launched in June 2006, has $20 million in assets under management.  The fund has an expense fee of 0.58%.  The fund has a dividend yield of 5.58%.  The fund tracks the Wisdom Tree Europe SmallCap Dividend Index.  The fund holds 353 globally-listed stocks.  The five top holdings are:  Cofinimmo (1.5%), Antena 3 de Television (1.2%), De La Rue PLC (1.2%), Close Brothers Group (1.1%), and NCC AB (1.1%).

By the Barchart.com ETF Research Team
Last updated:  12/20/2011

ETP's mentioned: DVY, VIG, SDY, VYM, DTN, FDL, FVD, DHS, PFM, PEY, DTD, DON, DES, IDV, DWX, PID, DOO, DOL, FGD, HGI, DEW, LVL, DTH, DWM, DEM, FDD, GULF, AUSE, DGS, DLS, DIM, DFJ, DFE.

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