First Trust Morningstar Dividend Leaders Index Fund

FDL

Market cap $7.2B

First Trust Morningstar Dividend Leaders Index Fund (NYSEARCA: FDL) is up 12.3% year-to-date, moving from about $44 to nearly $50.

Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the First Trust Morningstar Dividend Leaders ETF (FDL) is a passively managed exchange traded fund launched on March 9, 2006.

The First Trust Morningstar Dividend Leaders ETF offers a 4% yield, supported by underlying dividends rather than capital gains or option strategies. FDL's portfolio is heavily weighted toward energy (over 30%), positioning it to benefit from current macro tailwinds and elevated oil prices. While FDL has underperformed the S&P 500 over long horizons, it has outperformed during recent energy market rallies, making it attractive for tactical allocation.

Shifting from higher-risk assets to consistent income sources is a natural progression for retirees.

Move over artificial intelligence. The new AI investors want this year from the S&P 500 is "actual income.

Dividend ETFs like SCHD, FDL, and HDV are outperforming AI and SaaS stocks as investors favor moderate-yielding dividend payers over high-growth tech names.

Five dividend ETFs -- DFJ, SCHD, FDL, HDV and EYLD -- have outpaced SPY in 2026 as investors rotate toward quality income plays.

Dividend stocks and defensive sectors have dramatically outperformed as investors flee AI-vulnerable and AI-spending industries, but valuations now appear stretched. Consumer staples and energy sectors trade at historically high forward P/E multiples, often exceeding the S&P 500, despite lower long-term earnings growth prospects. Materials and industrials have also become extended, with valuations reflecting significant future earnings already priced in, especially given AI infrastructure spending.

Dividend stocks have sharply outperformed AI-related tech stocks since November 2025, reversing a multi-year trend. I see the rally in dividend ETFs like SCHD as overextended, prompting a pause in new purchases despite recent gains. AI is likely to benefit users more than makers, with sectors like banks, energy, and consumer staples positioned as early winners.

The First Trust Morningstar Dividend Leaders ETF (FDL) was launched on March 9, 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.