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ETF Specialist

An Outstanding Option for Exposure to U.S. Dividend-Paying Stocks

A broadly diversified portfolio and a contrarian rebalancing approach should give the fund an edge.

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WisdomTree U.S. LargeCap Dividend ETF (DLN) is an outstanding option for exposure to U.S. large-cap stocks. Its cost advantage relative to category peers in combination with its contrarian rebalancing approach should help it outperform the Russell 1000 Value Index over the long term. Because of its cost advantage relative to peers, under our enhanced ratings framework, we are upgrading its Morningstar Analyst Rating to Silver from Bronze.

The fund fully replicates the WisdomTree U.S. LargeCap Dividend Index. The index is designed to provide exposure to large-cap dividend-paying U.S. stocks. The index screens the top 300 largest stocks by market cap from the WisdomTree Dividend Index, which includes most U.S.-listed dividend-paying stocks. Qualifying stocks must have an expected regular cash dividend, a market capitalization greater than $100 million and meet trading liquidity requirements. The strategy weights each constituent by the value of dividends it expects to pay over the next year, relative to the aggregate value of all expected dividends for stocks in the portfolio. The portfolio is made up of about 283 stocks. The cumulative weighting of stocks with weights greater than 5% is capped at 50% of the total portfolio. Sector weightings are capped at 25% of the portfolio. The result is a well-diversified portfolio of large-cap, dividend-paying companies.

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

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