WisdomTree U.S. MidCap Dividend Fund (DON, expense ratio 0.38%) is the oldest of the mid-cap dividend ETFs, having been launched in June 2006. The fund contains 395 positions weighted by each stock’s percentage of the regular cash dividends expected to be paid by all the companies in the index in the coming year.
WisdomTree starts by eliminating the 300 largest-cap stocks in its base index of all domestic dividend payers. Issues that constitute the top 75% of the remaining market capitalization are included in MidCap Dividend portfolio. Consumer discretionary (22%), real estate (16.1%), and industrials (15.1%) are the three top sectors. Morningstar expects that the forward dividend yield for DON will be 3.02%.
Through Sept. 7, the ETF had a 12-month total return of 17.37%.
Although the First Trust portfolio is off to a strong start, many advisors will consider its short trading history and higher expense ratio as reasons to avoid this ETF. In choosing between REGL and DON, performance, risk, and cost are similar. If you prefer dividend growth, REGL might be for you. Those seeking broader diversification will give strong consideration to DON.
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