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ETF Specialist

A Distinct Approach to Investing in Dividend-Paying Mid-Caps

This ETF weights mid-caps by the dollar amount of dividends paid, instead of simply targeting the highest-yielding stocks.

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 WisdomTree MidCap Dividend ETF (DON) is a good choice for exposure to dividend-paying U.S. mid-cap stocks. The fund's strategy of weighting mid-cap stocks by dividends paid results in a mid-value tilt. Tilting toward mid-cap and value stocks can be risky; investors here need to be able to stomach extended periods of underperformance.

By weighting mid-cap stocks by the dollar amount of dividends paid, the fund provides a less aggressive approach to dividend investing compared with funds that concentrate in the highest-yielding stocks. The fund takes small positions in several hundred stocks that pay a dividend and have a market capitalization below that of the 300th-largest dividend payer. It could serve as a suitable satellite holding for investors seeking mid-cap exposure who believe in the fund's dividend-weighting approach.

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