Morningstar’s Five Stars Just Landed on VanEck’s Dividend ETF – Here’s What the Index Rebalance Could Change

VanEck Developed Markets Dividend Leaders ETF earns top Morningstar rating, offering 3.34% yield and 17.9% annualized return; ex-dividend June 4, index rebalance looms.

Morningstar has awarded its highest rating to the VanEck Morningstar Developed Markets Dividend Leaders UCITS ETF, upgrading the fund to five stars on 6 May. The accolade reflects risk-adjusted returns that have consistently ranked among the top of their peer group over multiple time horizons. Over five years the ETF delivered an annualised return of 17.9%, comfortably ahead of the category index’s 15.4% and more than double the peer average of 8.3%.

The timing is significant. June brings a cluster of events that will test the fund’s composition and its appeal to income-focused investors. The ETF goes ex-dividend on 4 June, with the 1.74 euro per share payout — representing a trailing yield of around 3.34% — scheduled for 11 June. That same month the underlying index undergoes its semi-annual rebalancing, a process that can trigger weight adjustments or outright removals among the 116 holdings.

The rebalance matters because the index applies unusually strict dividend filters designed to sidestep value traps. No stock can join unless its current payout exceeds the level of five years ago, and the expected distribution ratio must stay below 75%. Single positions are capped at 5% of the portfolio. Exxon Mobil is currently the largest holding at 5.60%, followed by Verizon Communications and TotalEnergies. The oil major’s own ex-dividend date falls on 15 May, and it has raised its payout for 44 consecutive years to 4.12 dollars per share. Pfizer, another top name, confirmed its 349th consecutive quarterly dividend at 0.43 dollars per share.

These screens have shaped a portfolio that leans heavily on defensive, income-oriented sectors. Financials account for roughly 31% of assets and energy for nearly 20%. The tilt towards cyclical dividend payers leaves the fund sensitive to macroeconomic shifts — eurozone inflation recently climbed to 3%, a figure that could influence rate expectations and sector performance. The rebalance will decide whether any of the current holdings fall foul of the strict criteria and need to be swapped out.

Investor demand for the strategy has been robust. In the first quarter of 2026 the ETF collected around 2 billion euros in net inflows, a sum that dwarfed many competing products. Assets under management stood at 7.6 billion euros as of 12 May, and the fund has gained 9.30% since the start of the year. Over the past twelve months the total return is roughly 22%.

The strong performance has pushed the ETF’s relative strength index to 74, signalling a mildly overbought condition in the short term. That has not deterred VanEck from expanding the product line. On 23 April a sister fund, the TDVX, began trading on the London Stock Exchange and Deutsche Börse. The new vehicle follows the same index rules but excludes US stocks and automatically reinvests distributions. The structural split was necessary because the original TDIV is domiciled in the Netherlands, offering tax advantages for Dutch investors but precluding an accumulating share class. Moving the existing fund to Ireland would have penalised current holders, so VanEck opted for a separate Irish-domiciled ETF.

The cost advantage remains a key selling point. The ongoing charge is 0.38% per year, compared with a Morningstar category median of 1.06% for global equity income funds. That gap helps explain why the ETF attracted a record wave of inflows at a time when global dividend strategies pulled in roughly 24 billion dollars in the first quarter — the strongest start to a year in four years.

With the ex-date, payout, and index rebalance all concentrated in a few weeks, the fund’s near-term attention will shift from the five-star rating to the nuts and bolts of portfolio maintenance. Any material changes to the sector mix or top holdings could quickly override the headlines about Morningstar’s endorsement.