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By: The ETF Professor

Yields on 10-year U.S. Treasuries currently reside at 2.48 percent, a significant jump from the 2.13 percent offered by Uncle Sam's debt on June 3.

Rising yields on what is generally considered a risk-free asset could affect some wildly popular dividend ETFs. It is common sense. Why take on equity risk, no matter how benign, with an ETF that only yields between 2.2 and 2.3 percent when less-risky Treasuries yield more?

Investors who want to remain in dividend ETFs over Treasuries do have options when it comes to finding funds with decent yields and superior performance compared with the largest dividend ETFs. A new kid on the dividend ETF block gives investors another choice.

The FlexShares Quality Dividend Defensive ETF (NYSEARCA:QDEF) debuted in December as part of a three-ETF suite of dividend products. QDEF aims to "target a beta lower than the Parent Index (Northern Trust 1250) and improve on the Parent Index's dividend yield," according to Flex Shares, the ETF unit of Northern Trust (NASDAQ:NTRS).

In the six months since its debut, QDEF has accumulated almost $23 million in assets under management while returning 13 percent. That performance is slightly better than that of the larger Vanguard High Yield Dividend ETF (NYSEARCA:VYM) and well ahead of the $12 billion iShares Dow Jones Select Dividend Index Fund (NYSEARCA:DVY), which is up nearly 10 percent over the same time.

Since inception, QDEF's underlying index has outperformed DVY's index by 330 basis points through the end of May

QDEF has a 30-day SEC yield of 2.74 percent and a distribution yield of 3.41 percent, according to issuer data. Obviously, both of those numbers are better than what 10-year Treasuries offer. To be fair to the other ETFs, QDEF's 30-day SEC yield is trails both DVY and VYM.

That does not mean the new ETF is not worthy of consideration in the current market environment. The opposite is true. QDEF's sector weights highlight why the fund could be profitable for investors if interest rates rise. The ETF allocates less than 10.2 percent of its combined weight to rate-sensitive telecom and utilities stocks. DVY and VYM allocate 31 percent and 13.4 percent, respectively, to those sectors.

QDEF also offers robust weights to sectors that will be important drivers of future dividend growth, including financial services and technology. Those sectors combine for nearly one-third of QDEF's weight. VYM is not bad on that front with a 22.8 percent combined weight to those sectors, but DVY devotes a mere 14.3 percent combined to financials and technology.

QDEF's top-10 holdings include seven Dow stocks with Wells-Fargo (NYSE:WFC), Altria (NYSE:MO) and Conoco-Phillips (NYSE:COP) the outliers. Exxon Mobil (NYSE:XOM) is the fund's largest holding with a weight of just over five percent.

In the near-term, QDEF is a viable option for investors who want to be involved in dividend stocks. Over the long term, the new ETF's exposure to sectors that will generate future dividend growth (financials and tech) along with a combined 23.3 percent weight to staples and energy, two groups with impressive track records of payout increases, should serve investors well.

What QDEF will need to separate itself from the dividend ETF pack is outperform funds such as VYM because that fund only charges 0.1 percent a year compared with 0.37 percent for QDEF.

Disclaimer: Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

Source: Another Dividend ETF With A Treasury-Beating Yield