First Trust Morningstar Dividend Leaders Index Fund

FDL

Market cap $6.41B

When retirement income depends on dividends that actually arrive, sector concentration stops being a flaw and starts looking like conviction.

First Trust Morningstar Dividend Leaders Index Fund ETF is downgraded to hold due to persistent underperformance versus peers. FDL offers a 4% starting yield and solid dividend growth, but its lack of technology exposure limits total and dividend growth returns. With 88 concentrated holdings, FDL's top ten positions comprise nearly 57% of assets, emphasizing sector bets and management selection.

First Trust Morningstar Dividend Leaders Index ETF (FDL) earns a buy rating, offering a compelling blend of value and yield for dividend-focused investors. FDL trades at a low 11.53x P/E with a 4.00% trailing yield, significantly outpacing the S&P 500 on income generation. Portfolio is heavily overweight Energy (27%), notably Exxon Mobil, creating sector concentration risk but also upside potential amid recent momentum.

I plan to diversify my REIT-heavy portfolio by systematically allocating to four dividend-focused ETFs in 2026. US economic growth remains steady but subdued, while equity valuations are elevated, suggesting muted long-term returns. REITs appear attractively valued with fading headwinds, offering plausible outperformance as fundamentals improve and rate cuts loom.

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.

Market looks overheated? Earn stable income with high-dividend ETFs?

High-yielding stocks get a lot of attention. But a lot of them have underperformed over the long run. Which are better? High yielders or dividend growth stocks?

Market volatility sparks income hunt -- dividend ETFs like SCHD, CGDV, SPYD, IDV, FDL & DIVO under $50 offer steady yields and value.

First Trust Morningstar Dividend Leaders Index Fund offers high yield and capital preservation for income-focused investors seeking risk diversification. FDL's defensive, value-oriented portfolio provides resilience during market downturns, but underperforms broad market benchmarks, like IWB, in total returns. The ETF's high concentration in top holdings and elevated expense ratio pose risks, making it better suited as a portfolio complement, not a core holding.

If you are looking for a source of income that outlives you, look into dividend ETFs that are time-tested over decades.