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WisdomTree Draws Up Plans for 2 Dividend ETFs

Pax World to liquidate a small, socially responsible ETF, Van Eck plans redeemable gold and silver ETFs, and Direxion announces 8 share splits and 8 reverse splits. Plus, the week's best- and worst-performing funds.

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On Wednesday, March 6, WisdomTree filed with U.S. regulators for permission to create a pair of passively managed exchange-traded funds that would offer exposure to companies with the strong potential for dividend growth.

The proposed funds represent the ETF world's latest foray into dividend ETFs, which by far are the most popular kind of strategy ETF. A recent study showed that higher dividend payouts predict higher earnings growth and solid fundamentals, although there’s plenty of academics taking the other view, citing the Modigliani-Miller theorem and contending that firms holding back earnings are firms that clearly have good investment opportunities to further grow profits. However, undermining this thinking is the fact that dividend-paying stocks have outperformed non-payout ones in virtually every market studied, with lower volatility.

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Robert Goldsborough does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.