Johnson & Johnson (JNJ), PepsiCo, Inc. (PEP): Go Beyond Large-Cap ETFs For Dividends

As is the case with small-caps, mid-cap dividend-payers deliver better returns while featuring lower volatility. Over the past 12 months, WisdomTree MidCap Dividend Fund (NYSEARCA:DON) has outpaced MDY by 520 basis points while being 230 basis points less volatile. MDY is the cheaper of the two ETFs with an expense ratio 0.25 percent compared to 0.38 percent for WisdomTree MidCap Dividend Fund (NYSEARCA:DON).

WisdomTree MidCap Dividend Fund (NYSEARCA:DON), which has $577.2 million in AUM, devotes a quarter of its weight to financials. Utilities, discretionary and industrial names combine for another 47 percent of the ETF’s weight. Top individual holdings include Windstream Corporation (NASDAQ:WIN), Ameren Corp (NYSE:AEE) and Best Buy Co., Inc. (NYSE:BBY).

“In our opinion, mid- and small-cap companies are important tools for providing diversification benefits and increased potential return,” said WisdomTree Research Director Jeremy Schwartz in the note. “Specifically, we think that mid- and small-cap dividend-paying companies deserve a larger share than they’re currently being allocated by market cap-weighted indexes. Allocation to mid- and small-cap dividend-paying companies can increase trailing 12-month” dividend yield.”

This article was originally written by The ETF Professor, and posted on Benzinga.