In this week’s Macro Theme, we review our “Slowing Dragon” theme. We began discuss...
Income Grows at WisdomTree
05/20/2015 9:00 am EST
This month we examine two dividend-oriented exchange-traded funds; investors should consider these products from WisdomTree, notes Mark Salzinger, editor of The Investor's ETF Report.
DLN is one of WisdomTree’s largest ETFs by assets, with more than $2 billion under management. It invests in the 300 largest stocks by market cap in the WisdomTree Dividend Index of US dividend-paying companies.
Those stocks are then weighted in the portfolio according to their expected total cash dividend over the next year, based on their most recently declared per-share dividend.
Stocks whose cash payouts make up a proportionally larger share of the aggregate cash dividends of all the components in the index get a proportionally heavier weighting.
However, its 300 stocks are chosen from those dividend-paying stocks that have a market capitalization of at least $2 billion and score highest on growth and quality factors.
Like DLN, stocks are weighted according to their proportionate share of all the dividends paid by companies in the index.
Beyond those similarities, their sector allocations are markedly different. Financials are the second-largest sector in DLN with 14% of the portfolio, but they make up less than 5% of DGRW, the smallest allocation it has to any sector.
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