VanEck Dividend ETF Absorbs Billions, Then Encounters Profit-Taking as Five-Star Rating and June Payout Near

VanEck’s dividend ETF hit a 52-week high after €2.1bn Q1 inflows and a 5-star Morningstar rating, but selling pressure emerged in mid-May amid profit-taking and caution.

The VanEck Morningstar Developed Markets Dividend Leaders UCITS ETF has enjoyed a stellar run in 2026, raking in €2.1bn in European inflows during the first quarter and hitting a 52-week high of €53.54 early last week. Yet by mid-May, the tide shifted: the fund that had become a favourite for income hunters suddenly appeared on sell lists, a reversal that has caught the attention of market watchers.

Morningstar awarded the fund its top five-star rating on 6 May, citing a standout return history. Annualised performance came in at 17.9% over multiple years, well ahead of the category index’s 15.4% and the peer group average of 8.3%. The investment process was also rated “above average.” The cost advantage is similarly striking: with a total expense ratio of 0.38%, the fund sits in the cheapest quintile of Morningstar’s Global Equity Income category, whose median fee stands at 1.06%.

Global dividend funds attracted $24.1bn in the first quarter — the strongest three-month period in four years — and this VanEck product was the clearest beneficiary in Europe. Assets under management swelled to €7.7bn. The rotation out of richly valued US technology stocks, where AI spending has dampened enthusiasm, has funnelled capital into sectors with dependable payouts.

The fund’s portfolio reflects that bias. Financials account for 31.6% of assets, energy for 17.9% and healthcare for 15.3%. Top holdings include Exxon Mobil at 5.6% and Verizon at 4.5%. Strict index rules keep concentrations in check: no single stock can exceed 5%, no sector 40%, and constituents must have paid a dividend in the past 12 months with a per-share amount no lower than five years ago. The payout ratio must stay below 75%.

Despite the strong fundamentals, selling pressure emerged in the second half of May. The move runs counter to the broader trend in technology and oil ETFs, which continue to attract fresh money. Analysts suggest the outflows may reflect profit-taking after a sustained rally, as well as general caution toward broad equity ETFs in the dividend segment.

Key dates are now approaching. The ex-dividend date falls on 4 June, with the payout scheduled for 11 June. Over the past twelve months, the ETF distributed €1.74 per share. The semi-annual index rebalancing also takes place in June — the second such review of the year after December. These events could reshape the portfolio’s composition, particularly with energy stocks near their sector cap.

On the macro front, the European Central Bank keeps its deposit rate at 2.0%, while eurozone inflation ticked up to 3.0% in April. That backdrop supports financial and energy holdings, which benefit from higher rates and commodity prices respectively.

VanEck has also expanded its product line. On 23 April, it launched TDVX on the London Stock Exchange, an accumulating share class that follows the same index methodology but excludes US stocks. TDIV itself remains domiciled in the Netherlands, a structure that delivers Dutch tax advantages on withholding tax but prevents the introduction of an accumulating share class. A switch to Ireland was ruled out to avoid disadvantaging existing investors, so VanEck opted for a standalone Irish fund instead.

With an average annual dividend growth of 16.9% over the past three years, the fund has clearly drawn attention. Whether the mid-May outflows are a temporary breather or the start of a broader pullback will depend on how investors balance the lure of consistent income against the temptation to lock in gains.