VanEck Dividend ETF’s Portfolio Overhaul Puts a Fresh Spin on a Near-Record Rally

VanEck Morningstar Dividend Leaders ETF nears 52-week high after a sweeping rebalance replaced energy giants with European banks, with Verizon earnings now in focus.

The VanEck Morningstar Developed Markets Dividend Leaders UCITS ETF is trading within striking distance of its 52-week high, but the path to that milestone looks markedly different than it did just weeks ago. A sweeping index rebalancing has reshuffled the fund’s largest holdings, replacing energy heavyweights with a revived banking contingent, just as a pivotal earnings season gets underway.

The ETF closed at €54.11 on Tuesday, a gain of 0.61% on the session, leaving it just 0.68% shy of the April 8 record of €54.48. Assets under management have swelled to €8.58 billion, underscoring steady demand for a strategy built on dividend discipline rather than yield-chasing.

A Five-Year Rule Reshapes the Lineup

The fund tracks the Morningstar Developed Markets Large Cap Dividend Leaders Screened Select Index, which imposes two non-negotiable conditions for membership: a company must have paid a dividend over the past twelve months, and its dividend per share must be at least as high as it was five years ago. A payout ratio cap of 75% further weeds out firms that might be funding distributions through debt or asset sales.

That five-year lookback period has just triggered one of the most dramatic rotations in the fund’s history. European banks and insurers were forced to slash or suspend dividends during the pandemic in 2020. Now that the five-year clock has reset, institutions including HSBC, BNP Paribas, UniCredit and ING Groep have been readmitted to the index. The financial sector’s weighting has surged to roughly 44% of the portfolio.

The flip side: energy stocks that once dominated the fund have been ejected. Exxon Mobil, ConocoPhillips and Tenaris were all removed during the June rebalancing. That shift is particularly notable given that energy names have surged roughly 30% in 2026, propelled by geopolitical tensions and disciplined capital spending. The index’s rules, however, are indifferent to sector momentum — only dividend consistency matters.

Verizon Earnings Take Center Stage

With energy out and banks in, Verizon Communications has become a critical bellwether for the fund. The telecom giant is the second-largest holding at roughly 4.69% of assets and reports second-quarter results on July 24. Analysts expect earnings per share of $1.22 on revenue of about $34.9 billion, though some forecasts edge higher to $1.27 and $35.15 billion respectively.

For the ETF’s dividend sustainability filter, the key metric is free cash flow. Verizon is projected to generate over $21 billion in free cash flow for the full year 2026, a figure that will determine whether its payout remains comfortably within the index’s guardrails. The company has been restructuring aggressively, planning to sell nearly 300 retail locations and cut 3,000 jobs — moves designed to protect margins and, by extension, the dividend.

Exxon Mobil, until recently the fund’s largest position at 5.60%, is now absent from the portfolio entirely. Its upcoming earnings report will have no direct impact on the ETF, though it serves as a reminder of how quickly the index’s composition can shift.

Technical Indicators Flash Caution, but Fundamentals Hold

The rally has pushed the 14-day relative strength index to 71.3, firmly into overbought territory — a level that has historically preceded short-term pauses or modest pullbacks. The current price of €54.02 sits 7.64% above the 200-day moving average of €50.19, a gap that suggests the advance has been driven by fundamental factors rather than speculative froth.

The fund has delivered a 12.45% gain year-to-date and a 26.84% return over the past twelve months. With the next dividend distribution scheduled for September, investors are watching whether the new banking-heavy portfolio can sustain the momentum — or whether the overbought reading signals a breather before the next leg higher.