Is WisdomTree US High Dividend ETF (DHS) a Strong ETF Right Now? – Entrepreneur

Launched on 06/16/2006, the WisdomTree U.S. High Dividend ETF (DHS) is a smart beta exchange traded fund offering broad exposure to the Style Box – Large Cap Value category of the market.

hero image zacks 410002 – Zacks

What Are Smart Beta ETFs?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

If you’re the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.

Fund Sponsor & Index

Because the fund has amassed over $859.32 million, this makes it one of the average sized ETFs in the Style Box – Large Cap Value. DHS is managed by Wisdomtree. Before fees and expenses, this particular fund seeks to match the performance of the WisdomTree U.S. High Dividend Index.

The WisdomTree U.S. High Dividend Index is a fundamentally weighted index that measures the performance of companies with high dividend yields selected from the WisdomTree Dividend Index.

Cost & Other Expenses

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF’s expense ratio.

Operating expenses on an annual basis are 0.38% for DHS, making it on par with most peer products in the space.

DHS’s 12-month trailing dividend yield is 2.96%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Consumer Staples sector – about 19.40% of the portfolio. Financials and Healthcare round out the top three.

Taking into account individual holdings, Philip Morris International Inc (PM) accounts for about 5.46% of the fund’s total assets, followed by Altria Group Inc (MO) and Abbvie Inc (ABBV).

The top 10 holdings account for about 43.86% of total assets under management.

Performance and Risk

The ETF has added roughly 22.78% and it’s up approximately 22.48% so far this year and in the past one year (as of 12/24/2021), respectively. DHS has traded between $68.47 and $82.03 during this last 52-week period.

The ETF has a beta of 0.89 and standard deviation of 21.89% for the trailing three-year period, making it a medium risk choice in the space. With about 314 holdings, it effectively diversifies company-specific risk.

Alternatives

WisdomTree U.S. High Dividend ETF is a reasonable option for investors seeking to outperform the Style Box – Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.

IShares Russell 1000 Value ETF (IWD) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $59.15 billion in assets, Vanguard Value ETF has $91.51 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box – Large Cap Value.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.

Get it free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

 

WisdomTree U.S. High Dividend ETF (DHS): ETF Research Reports

 

Altria Group, Inc. (MO): Free Stock Analysis Report

 

Philip Morris International Inc. (PM): Free Stock Analysis Report

 

AbbVie Inc. (ABBV): Free Stock Analysis Report

 

Vanguard Value ETF (VTV): ETF Research Reports

 

iShares Russell 1000 Value ETF (IWD): ETF Research Reports

 

To read this article on Zacks.com click here.

 

Zacks Investment Research