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Should WisdomTree U.S. High Dividend ETF (DHS) Be on Your Investing Radar?

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  • PM

The WisdomTree U.S. High Dividend ETF (DHS) was launched on 06/16/2006, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Value segment of the US equity market.

The fund is sponsored by Wisdomtree. It has amassed assets over $815.97 million, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.

Why Large Cap Value

Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.

Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.38%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 3.90%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Consumer Staples sector--about 19.90% of the portfolio. Financials and Information Technology round out the top three.

Looking at individual holdings, Philip Morris International Inc (PM) accounts for about 5.72% of total assets, followed by Altria Group Inc (MO) and Abbvie Inc (ABBV).

The top 10 holdings account for about 45.04% of total assets under management.

Performance and Risk

DHS seeks to match the performance of the WisdomTree U.S. High Dividend Index before fees and expenses. 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.

The ETF has added about 18.25% so far this year and was up about 30.26% in the last one year (as of 10/22/2021). In the past 52-week period, it has traded between $60.36 and $81.05.

The ETF has a beta of 0.91 and standard deviation of 21.99% for the trailing three-year period, making it a medium risk choice in the space. With about 318 holdings, it effectively diversifies company-specific risk.

Alternatives

WisdomTree U.S. High Dividend ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, DHS is a good option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV) track a similar index. While iShares Russell 1000 Value ETF has $56.44 billion in assets, Vanguard Value ETF has $87.19 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.

Bottom-Line

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

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.


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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
 
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