ETFs Delivering Dividend Growth The Right Way

Over the long term, dividend growth and reinvestment of those growing dividends are potent boosters of a portfolio's total returns. Dividend growth can often be found via the quality factor, and there is no shortage of exchange-traded funds offering investors exposure to both themes.

Among the most seasoned and best-performing ETFs with featuring steady dividend growth and quality tilts are the WisdomTree LargeCap Dividend Fund (ETF)WisdomTree High Dividend Fund

DHS, DLN In Focus

DHS's underlying index, the WisdomTree High Dividend Index (WTHYE) 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 WisdomTree

<3>More From Benzinga

ETFs Delivering Dividend Growth The Right Way

Get 5 Dividend ETFs In 1 With This New ETF

DHS is a defensive ETF that marries two favored income themes: low volatility and dividend yield. The ETF's underlying index yields just over 4 percent with annualized volatility of under 18 percent, according to issuer data.

An important point to note is that as the current bull market has extended its now lengthy run, favored factors such as low volatility and high dividends have gotten progressively more expensive. However, WisdomTree ETFs, such as DHS, have avenues for tempering investors' exposure to richly valued stocks and sectors.

Bull Market Influence

While the WisdomTree Indexes certainly saw P/E multiple expansion, albeit to varying degrees, its important to note that each has an annual rebalance dividends market capitalization in a recent note

Since inception, DHS has topped 77 percent of rival funds. Over the past five years, that number jumps to 99 percent.

While investors have poured billions off fresh capital into bond ETFs and defensive sectors drove the S&P 500 earlier this year, those themes, particularly the latter, are showing vulnerability as bond traders price in rising odds of the Federal Reserve raising interest rates in December.

If the U.S. Federal Reserve embarks on a cycle of raising interest rates

On that note, it is worth highlighting that DLN allocates just 11.3 percent of its weight to rate-sensitive telecom and utilities stocks. Conversely, the ETF devotes nearly 27 percent of its combined weight to cyclical technology and energy stocks, sectors that historically perform well when rates rise.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com