Published Thu, 10 Dec 2020 14:54:32 -0500 on Seeking Alpha
Seeking AlphaETF AnalysisWisdomTree International SmallCap Dividend ETF Does Not Look Appealing To MeDec. 10, 2020 2:54 PM ET|| About: WisdomTree International SmallCap Dividend ETF (DLS)by: Vasily ZyryanovVasily Zyryanov Long/Short EquitySummaryDLS was created to track the WisdomTree International SmallCap Dividend Index; the Index is a fraction of the WTDFA, which is not currency-hedged.
DLS is substantially more diversified than its U.S.-focused analog - DES, as it had 830 holdings in the portfolio as of December 9 vs. 635 in the case of DES.
The fund is long stocks mostly from the industrials (23.3%), financials (14.8%), and materials sectors.
Its SEC 30-day yield is slightly north of 3%, which is too low for my taste, especially considering the high level of risk.
Today, after a month and a half pause, I return to the discussion of dividend-focused ETFs with a note on the WisdomTree International SmallCap Dividend ETF (DLS).
The global rally in cyclical names fueled by the success of the coronavirus vaccines led to the compression of dividend yields, which have already been under pressure due to the payout reduction trend precipitated by the pandemic, thus further complicating the stock-picking process for income-oriented investors.
However, a few opportunities still remain, if looked attentively enough. With a ~3% standardized yield, DLS represents one of such income-generating picks, but clearly not the best one. Why? Let me elaborate on why.
What the fund is focused on
The WisdomTree International SmallCap Dividend ETF was created to track the WisdomTree International SmallCap Dividend Index. The index itself represents a narrower fraction of the WisdomTree International Equity Index (abbreviated as the WTDFA). As the firm clarified on page 34, the selection methodology for the WTISDI is identical to the one used in the case of the domestic small-cap dividend index. An important remark worth making here is that the... Read more