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Top Large-Cap, Small-Cap And Midcap ETFs Of 2016: Focus On Dividends

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The top large-cap, small-cap and midcap ETFs of 2016 focus on dividend payers, giving them a value skew that paid off big in a year when investors grew wary of expensive names amid tepid earnings growth.

Here is a look at the winning trio:

Click Here To See The Best And Worst ETFs Of 2016

Large Caps

Oppenheimer Ultra Dividend Revenue ( RDIV ), the top-performing large-cap ETF of 2016, selects the 60 highest-yielding stocks from the S&P 500 and S&P 400. It then ranks or weights them by top-line revenue rather than the traditional market capitalization.

Revenue weighting offers diversified exposure to the market unlike some smart-beta or alternatively weighted strategies, according to Oppenheimer. And it is less likely to be full of trendy, overpriced stocks than a traditional, market-cap-weighted strategy, the firm's analysts say.

Additionally, revenue, unlike earnings, is less susceptible to manipulation and, unlike dividends, is less vulnerable to shifts in management decisions, in Oppenheimer's view.

The fund rebalances on a quarterly basis.

In 2016, RDIV jumped 28.3% vs. a 12.0% gain for large-cap peer SPDR S&P 500 ( SPY ).

Assets under management: $337.2 million

Inception date: Sept. 30, 2013

Expense ratio: 0.39%

Yield: 3.27%

Number of holdings: 60

Assets in top 10 holdings: 49.72%

Top holdings: Phillip Morris ( PM ), Verizon ( VZ ), Duke Energy ( DUK )

Small Caps

ProShares Russell 2000 Dividend Growers (SMDV), the top-performing small-cap ETF of 2016, invests in Russell 2000 companies that have grown dividends for at least 10 consecutive years.

That's a tough bar for most small companies, and gives the ETF an extremely concentrated portfolio.

Companies that grow dividends have historically outperformed those that do not, according to ProShares. Additionally, the typically strong fundamentals and stable earnings of dividend growers help them to deliver strong returns with lower volatility.

The fund employs a 30% cap on any individual sector weighting to reduce risk, and rebalances four times a year. Stocks are equal weighted.

In 2016, SMDV vaulted 35.7% vs. a 21.6% gain for iShares Russell 2000 (IWM).

AUM: $349.2 million

Inception date: Feb. 3, 2015

Expense ratio: 0.40%

Yield: 1.40%

Number of holdings: 60

Assets in top 10 holdings: 19.49%

Holdings include: GATX Corp (GATX), Cass Information Systems (CASS), York Water Co. (YORW)

Midcaps

ProShares S&P MidCap 400 Dividend Aristocrats (REGL), the top-performing midcap ETF of 2016, focuses on companies in the S&P MidCap 400 index that have grown dividends for at least 15 consecutive years.

Like its small-cap sibling, this ETF is equal-weighted, caps sector weightings to no more than 30%, and rebalances four times a year.

In 2016, REGL advanced 33.7% vs. a 20.5% gain for SDPR S&P MidCap 400 (MDY).

AUM: $311.8 million

Inception date: Feb. 3, 2015

Expense ratio: 0.40%

Yield: 1.34%

Number of holdings: 44

Assets in top 10 holdings: 24.96%

Holdings include: Bank of the Ozarks (OZRK), Lincoln Electric (LECO), Brown & Brown (BRO)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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