First Trust Morningstar Dividend Leaders Index Fund

FDL

Market cap $7.14B

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.

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.