For investors seeking momentum, First Trust Morningstar Dividend Leaders Index Fund (FDL - Free Report) is probably on radar now. The fund just hit a 52-week high and is up about 17.8% from its 52-week low price of $25.76/share.
But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:
FDL in Focus
This fund tracks the Morningstar Dividend Leaders Index, which consists of stocks listed on one of the three major exchanges, NYSE, NYSE Amex or Nasdaq, that have shown dividend sustainability. It has key holdings in consumer staples, energy, telecommunications services, utilities and healthcare with double-digit exposure each. The ETF charges 45 basis points in annual fees (see: all the Large Cap Value ETFs here).
Why the Move?
The dividend corner of the broad U.S. stock market has been an area to watch lately given the bouts of volatility that have raised the appeal for dividend investing. Dividend-paying securities are the major sources of consistent income for investors when returns from the equity market are at risk. This is because dividend products offer the best combination of safety in the form of payouts and stability as these are less immune to the large swings in stock prices. Additionally, the Fed’s shift to a patient approach on interest rates after lifting rates for three years has returned the lure for dividend investing this year.
More Gains Ahead?
Currently, FDL has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. Therefore, it is hard to get a handle on its future returns one way or the other. However, many of the segments that make up this ETF have a strong Zacks Industry Rank. So, there is definitely some promise for those who want to ride this surging ETF a little further.
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 >>