Although WisdomTree is a relatively small ETF issuer, the
company is beginning to make a name for itself in the industry.
While it is gaining prominence for its innovative hedged
, like in the case of Japan and
, its real claim to fame is its dividend weighting.
The firm has a complete lineup of dividend weighted ETFs that
are unlike many others on the market. That is because these
securities do not base security weights on the size of a company,
but rather on cash dividends paid (see
Three Impressive Small Cap Dividend ETFs
This novel approach could be better for those who believe in
the power of dividends and the signal that they send to the
market. After all, a cash payment is very hard to fake, so many
believe that these dividend payers are safer than their
A dividend-focused strategy has certainly paid off for
WisdomTree, as several of its most popular ETFs come to us in
this space including
. These funds both have more than one billion in total AUM, and
were probably part of the inspiration for the firm's latest two
filings in the dividend space.
These brand new documents,
which were released
to the SEC
for approval, follow in the footsteps of several of its top
products, zeroing in on stocks that are paying dividends and
giving more weight to those that offer up bigger cash payments.
However, there is a twist with these two proposed products, as
they both look to put a premium on dividend growth (read
4 Excellent Dividend ETFs for Income and
Proposed Dividend ETFs in Focus
The in-registration funds, the WisdomTree U.S. Dividend
Growth Fund and the WisdomTree U.S. Small Cap Dividend Growth
Fund, look to center on their respective cap levels with a focus
on payouts. Both appear to be based off of established WisdomTree
indexes, but seek to apply more restrictive filters, which could
make these funds relatively unique in the ETF world.
First, the more large cap-focused U.S. Dividend Growth Fund
will be tracking the WisdomTree Dividend Index, holding 300
stocks that have the best fundamental factors and a high
likelihood of dividend increases. Specifically, long-term
earnings growth expectations, ROE, and ROA, will be a big focus
of the fund beyond the projected growth of the payout.
The ETF looks to focus on stocks that have paid a dividend in
the past 12 months and have a market cap of at least $2 billion.
The product will be weighted by dividends on an annual basis, and
stocks will be capped at 5% of the total (read
Have You Overlooked These Dividend ETFs?
The small cap-centric product will take a similar approach,
tracking the WisdomTree Small Cap Dividend Index. Of these
securities, once again 300 stocks that have the best fundamental
factors and prospects for dividend increases will be
The main difference between the two ETFs looks to be the
market cap level that is targeted. The first ETF will focus on
large caps with a two billion market cap minimum while this small
cap ETF only requires a market cap of just $100 million.
Additionally, the small cap fund will only allow any one stock
to obtain 2% of the ETF's total capital. This suggests that it
will be far more spread out among its 300 stock portfolio,
although it will still look at ROA, ROE, and earnings growth, in
addition to projected dividend increases, for its exposure.
These two ETFs could be interesting for those who like
WisdomTree's approach to dividends, but value dividend growth
more than anything. The extra fundamental factors could also help
to drill down the portfolio, so you might get a better selection
of stocks in these ETFs (read
Can You Beat These High Dividend ETFs?
However, this exposure is probably going to cost a bit
more-thanks to the addition of these factors-so it might not be a
low cost choice. This already somewhat true for WisdomTree's
other products, as they are rarely the cheapest but instead hang
their hat on having unique exposure.
The funds will not be short of competitors though, as the
dividend ETF world is rife with choices. Chief among these is the
SPDR S&P Dividend ETF (
This extremely popular product does about one million shares
in volume a day and has a market cap over $10.5 billion. This is
all with focusing on higher yielding stocks that have a proven
history of consistently increasing dividends for at least the
past 25 years.
Given the success of this product and countless others in the
space, it is reasonable to assume that there is a great deal of
interest in the dividend growth ETF world. However, it will be
interesting to see if WisdomTree's new filings can hit the
market, and if the focus on dividend weighting is enough to
differentiate itself and attract new assets in this extremely
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WISDMTR-E SC DV (DGS): ETF Research Reports
WISDMTR-LC DIV (DLN): ETF Research Reports
WISDMTR-J HEF (DXJ): ETF Research Reports
SPDR-SP DIV ETF (SDY): ETF Research Reports
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