Hope all of you had a terrific Holiday Season. We thought it might be a useful time to take a quick peek back and list the performance for last year’s top Dividend Focused ETFs. The following table has the 2011 top 10 Dividend Focused ETFs ranked by total return. The top fund was the First Trust Morningstar Dividend Leaders Fund FDL with a commanding 13.7% total return. We round out the top three with the runner-up; the WisdomTree Equity Income Fund DHS with a 13.3% gain, followed closely by another WisdomTree offering, the WisdomTree ex-Financials Fund DTN. The WT [DTN] fund's nice gain was not surprising in light of the financial debt crisis drama surrounding Europe and our U.S. credit downgrade this past year This fund's timely advantage is that it totally sidesteps all financial sector holdings, thereby clawing out a strategic advantage by sector composition. WT's sibling DHS is a fundamentally weighted fund based on their own screening metrics for holdings that meet the top 30% for dividend yield. 2011’s winner [FDL], First Trust Morningstar Dividend Leaders Fund, is based on the Morningstar Dividend Leaders Index. This is a proprietary index tabulated from a quant Morningstar screening process with selected stocks based on dividend yield and other proprietary metrics. It is rebalanced four times a year.
When the Financial sector stocks come back into favor, we fully expect some other Dividend focused ETF methodologies that favor those metrics to have some very favorable results. We’re afraid it just may take awhile though, and expect the financial sector to come under more pressure in 2012 as well. The European debt crisis seems to be cooling off a bit but ultimately it will take a long time to simmer, as this issue will flare up every week with the market scrutinizing every member's sovereign bond auctions. The Dividend ETFs we follow that have hefty weighting in the financial sectors will underpeform and likely have a less than fruitful year. As of late November the Dividend ETFs with heavy exposure to financial related stock holdings include DWM, at over 21%, the popular SDY with around 16.8%, and DLS with 15.8%.
Symbol | 2011 Top 10 Dividend Focused ETFs | % Tot. Return |
FDL | First Trust Morningstar Dividend Leaders Index Fund | 13.7 |
DHS | WisdomTree Equity Income Fund | 13.3 |
DTN | WisdomTree Dividend ex-Financials Fund | 12 |
DVY | iShares Dow Jones Select Dividend Index ETF | 11.1 |
VYM | Vanguard High Dividend Yield ETF | 9.9 |
DLN | WisdomTree LargeCap Dividend Fund | 8.7 |
PFM | PowerShares ETF Trust Dividend Achievers Portfolio | 8.3 |
FVD | First Trust Value Line Dividend Index Fund ETF | 8 |
DTD | WisdomTree Total Dividend Fund | 7.65 |
PEY | PowerShares High Yield Equity Dividend Achievers Portfolio | 7.4 |
Disclosure: I have no positions in any stocks/funds mentioned, and no plans to initiate any positions within the next 72 hours. I receive no compensation from any of the fund sponsors mentioned.
