Strict Dividend Filters Propel VanEck ETF to Top Morningstar Rating as New Accumulating Version Debuts

VanEck's TDIV ETF, with €7.7bn in assets and a five-star Morningstar rating, will trim Exxon Mobil's weighting in June as it rides dividend investment surge. Fund returned 17.9% annually over five years.

VanEck’s dividend-focused exchange-traded fund is approaching a pivotal moment next week, when its semi-annual index reshuffle will force a slight trim in Exxon Mobil’s weighting and simultaneously deliver a payout to investors. The adjustment comes as the fund rides a wave of inflows that has pushed assets under management to €7.7bn and earned it a five-star rating from Morningstar.

The VanEck Morningstar Developed Markets Dividend Leaders UCITS ETF (TDIV) has been hoovering up capital as global investors ditch richly valued technology stocks in favor of companies that reliably distribute profits. In the first quarter alone, €2.1bn flowed into the fund, part of a worldwide surge that saw $24bn funneled into dividend equity strategies — the strongest three-month tally in four years. The backdrop: big tech firms are plowing cash into artificial intelligence rather than buybacks, making income-paying shares more attractive.

Morningstar awarded its top rating on May 6, citing the fund’s consistently superior risk-adjusted returns. Over five years, TDIV delivered an annualized return of 17.9%, handily beating its category index’s 15.4% and more than doubling the peer-group average of 8.3%. The information ratio after fees has ranked in the top 10% of its Morningstar category over one, three and five years. The fund’s 0.38% annual expense ratio also helps: the median cost in the EAA Fund Global Equity Income peer group stands at 1.06%.

The portfolio tracks an index of 100 large-cap stocks that meet a strict set of dividend criteria. Companies must have paid a distribution over the prior twelve months, avoided any cut versus their level five years ago, and kept their forward payout ratio below 75%. This screen is designed to weed out value traps. Financials lead the sector breakdown at roughly 31%, followed by energy at around 20%. The top holding is Exxon Mobil with a 5.64% weight — just above the index’s 5% cap, which will be corrected at the June rebalancing. Other heavy weights include Verizon, TotalEnergies, Nestlé, Pfizer, Shell, Roche, PepsiCo, Allianz and BP; together the top ten account for 35.5% of the fund.

VanEck has also extended the family. On April 23 it launched the VanEck Morningstar Developed Markets ex-US Dividend Leaders UCITS ETF (TDVX), an accumulating version domiciled in Ireland. The new fund follows the same methodology but excludes US-listed stocks. Its annual fee is also 0.38%. The move addresses a structural limitation of the original ETF, which is registered in the Netherlands and therefore must distribute its income. A full relocation of TDIV to Ireland was ruled out because it would have triggered tax consequences for existing holders.

TDIV now trades at €53.40, a whisker below its 52-week high of €53.54, with a year-to-date gain of 10.4%. Over the past twelve months the fund has climbed roughly 23%. Its trailing twelve-month dividend stands at €1.74 per share, and the average annual dividend growth rate over the last three years is 16.9%.

Investors in the distributing fund will want to mark June 4 on their calendars: that is the ex-dividend date, with the payout following on June 11. The same day marks the start of the semi-annual rebalancing, when the index will strip out any constituents that no longer meet its rigid dividend criteria and adjust weights — including the Exxon Mobil position back to 5%. The convergence of payout and portfolio shuffle makes for a busy week for the fund’s watchers.