VanEck’s Dividend Fund Snags Morningstar’s Top Rating Just as June Payout Looms

VanEck's €7.6bn Developed Markets Dividend Leaders ETF achieves Morningstar 5-star rating with 18% annualized returns, low fees, and overbought technical signals.

A red-hot sector rotation has poured billions into dividend-focused strategies, and no fund in Europe is riding the wave harder than the €7.6bn VanEck Morningstar Developed Markets Dividend Leaders UCITS ETF. The vehicle has just been awarded a five-star rating by Morningstar, a seal of approval that coincides with the fund’s upcoming quarterly payout cycle and a technical reading that suggests the rally may be getting stretched.

Cost advantage drives the outperformance

Morningstar’s upgrade rests on a five-year annualised return of nearly 18%, a figure that leaves the category average in the dust. The analysts point to the fund’s total expense ratio of 0.38% — less than half the industry median — as a structural edge that compounds into a meaningful performance advantage over time. The ETF tracks the Morningstar Developed Markets Large Cap Dividend Leaders Screened Select Index, which targets the 100 highest-yielding stocks that also pass quality and resilience screens. With a 30-day annualised volatility of just 9.91%, the portfolio remains remarkably stable for a yield-focused strategy.

Portfolio anchored by financials and energy

The index methodology naturally tilts toward high-dividend sectors, and the current composition reflects that. Financials make up roughly 31% of the fund, followed by energy at about 21%. Exxon Mobil stands as the largest single holding at 5.83%, with Verizon Communications at 4.76% and TotalEnergies at 3.80%. Defensive names such as Nestlé and Roche round out the top positions, helping to temper the swings that can come from energy exposure. That combination explains the fund’s controlled profile: energy stocks deliver generous payouts, while telecoms and consumer staples dampen drawdowns.

Technicals flash caution near the high

The ETF closed last Friday at €52.47, a whisker 0.87% below its 52-week peak. Year-to-date it has gained 8.50%, and over the past twelve months the advance stands at 21.00%. Yet the relative strength index has climbed to 74.1, a level that historically signals a short-term overbought condition. The fund’s net asset value on 14 May stood at €52.42, and the tight gap between NAV and market price suggests no major dislocation. Despite the overbought reading, the underlying momentum remains intact — the latest weekly performance was positive, and Friday’s near-flat close of -0.02% merely paused the run-up.

Upcoming dividend and new sibling fund

The next quarterly ex-dividend date is pencilled in for 4 June, with the payout expected roughly a week later. Investors saw a distribution of €0.21 per share in March, and the current trailing yield sits at approximately 3.34%. The fund’s size and liquidity — now at €7.6bn in assets under management — have attracted substantial inflows this year as investors rotate out of US tech stocks and into capital-intensive sectors. Meanwhile, VanEck has expanded the product family: a new accumulating sister ETF, TDVX, began trading on Deutsche Börse at the end of April. That vehicle excludes US equities and reinvests income, catering to tax and regulatory preferences in certain jurisdictions. The primary Dutch-domiciled fund continues to distribute, offering local investors a withholding-tax advantage. With a five-star rating, a near-record price, and a payout date on the horizon, the fund faces a loaded June calendar — and the technical indicator suggests the next move may need to digest recent gains before pushing higher.