Here's How Many Shares of the WisdomTree US LargeCap Dividend ETF (DLN) You'd Need for $500 in Yearly Dividends
Key Points
The WisdomTree U.S. LargeCap Dividend Fund focuses on domestic large-cap dividend payers.
Its index is dividend-weighted in an effort to project holdings’ payouts for the coming year.
This ETF has a low yield, implying room for dividend growth.
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The WisdomTree U.S. LargeCap Dividend Fund (NYSEMKT: DLN) is closing in on its 20th birthday, confirming it's a seasoned veteran among dividend-focused exchange-traded funds (ETFs) and that it's battle-tested across a variety of market settings.
Let's take a look at home many shares of this ETF an investor needs to grab to generate $500 of dividend income on annual basis.
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This dividend ETF requires large capital to generate $500 in yearly payouts, but it has perks. Image source: Getty Images.
This ETF does things differently
The $5.53 billion WisdomTree U.S. LargeCap Dividend Fund tracks the WisdomTree U.S. LargeCap Dividend Index. Unlike traditional indexes followed by dividend ETFs, this benchmark doesn't emphasize yield or dividend increase streaks to weight its holdings. Rather, the gauge "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," according to WisdomTree.
Historical data indicate this ETF paid a dividend of $1.59 a share over the trailing 12 months. Assuming that rate stays flat, an investor would need to own 314.46 shares of this fund to generate $500 in annual dividend payments.
Based on the ETF's Nov. 26 closing price of $87.99, an investor would need to plunk down $27,672.48 to extract $500 in yearly income from this ETF. That sounds daunting, but this ETF does feature some perks.
For example, it delivers dividends on a monthly basis, comparing favorably to many ETFs which pay dividends on a quarterly basis. That provides for a more consistent income stream and one that allows payouts to compound faster if investors are reinvesting dividends.
Second, this ETF's combined weight of nearly 37% to financial services and technology stocks implies room for long-term dividend growth because those are low-yielding sectors chock-full of profitable companies that are displaying commitment to higher dividend payments.
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Todd Shriber has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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