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ETF Specialist

A Unique Approach to Target Dividend-Paying Stocks

This fund’s weighting approach skews it toward the larger and more profitable dividend-payers.

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In an article titled "The Fundamentals of Fundamental Indexing," I recently explored the investment thesis of fundamental indexing and examined the investment merits of strategies that use this weighting approach. This ETF Spotlight takes a closer look at  WisdomTree US LargeCap Dividend ETF (DLN), which is a fundamentally weighted dividend-focused strategy.

This exchange-traded fund effectively diversifies risk and rebalances into stocks as they become cheaper relative to their dividends, which should give it an edge over its peers. The fund offers a cost advantage compared with actively managed peers, but there are cheaper index alternatives. It earns a Morningstar Analyst Rating of Bronze.

Adam McCullough does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.