) new status as a dividend stock is, no pun intended, bearing
fruit. At least at the new ETF level.
The WisdomTree U.S. Dividend Growth Fund (
), which debuted today, features the iPad maker as its largest
holding with a weight of 4.71 percent.
Aside from making for good headlines, such as the one on this
article, Apple's ascent to the top of any dividend ETF is a sign
of a growing theme in the dividend ETF space. That being the move
toward those funds that focus on weighting metrics beyond
length of dividend increase streaks
"Investors are hungry for income in this low interest rate,
low yield environment," said WisdomTree Research Director Jeremy
Schwartz in a statement. "Rather than relying on historical
records of dividend increases, DGRW uses real-time growth and
quality metrics focused on companies who are growing their
Part of the focus on stocks that are showing favorable
dividend growth going forward includes the WisdomTree U.S.
Dividend Growth Fund allocating over 20 percent of its weight to
the technology sector, the sector currently leading the market's
dividend growth. Other tech names featured among the new ETF's
top-10 holdings include Dow components Microsoft (NASDAQ:
) and Intel (NASDAQ:
To be sure, DGRW does not eschew traditional dividend sectors
and stocks. For example, consumer staples, often viewed as
nirvana for income investors, is the new ETF's fourth-largest
sector weight with an allocation of almost 19.5 percent. Five
staples names - Wal-Mart (NYSE:
), Procter & Gamble (NYSE:
), Coca-Cola (NYSE:
), Altria (NYSE:
) and PepsiCo (NYSE:
) - are found among DGRW's top-10 holdings.
DGRW, which features an annual expense ratio of 0.28 percent,
also allocates nearly percent of its to both consumer
discretionary and industrials names. Health care, financial
services and energy stocks combine for about 16 percent of the
according to WisdomTree data
With the dividend ETF space gaining new members on what feels
like an almost weekly basis, those new funds need to do something
to standout from already established names that, in some cases,
control billions of dollars in assets. DGRW has standout
potential due to its index's "secret sauce."
Actually, it is not a secret. The WisdomTree U.S. Dividend
Growth Index focuses on growth and quality factors.
"The he growth factor ranking is based on long-term earnings
growth expectations, while the quality factor ranking is based on
three year historical averages for return on equity and return on
assets. The Index is dividend weighted annually to reflect the
proportionate share of the aggregate cash dividends each
component company is projected to pay in the coming year, based
on the most recently declared dividend per share,"
according to Wisdom Tree
Said another way, dividend increase streaks are nice, but that
metric is backward-looking.
"We believe the key drivers of dividend growth are constantly
changing. And a number of dividend-based indexes - through
restrictive inclusion screens based on patterns of historical
dividend trends - may miss out on what we see as dividend growth
opportunities in today's market," Schwartz said
in the statement
For more on dividend
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