Quick Read
-
WisdomTree U.S. SmallCap Dividend Fund (DES) surged 14% YTD by filtering unprofitable small caps through dividend requirements.
-
The analyst who called NVIDIA in 2010 just named his top 10 stocks and VictoryShares US Large Cap High Div Volatility Wtd Index ETF wasn’t one of them. Get them here FREE.
Most dividend ETF conversations start and end with the S&P 500. That is fine if you already own Schwab U.S. Dividend Equity ETF or Vanguard Dividend Appreciation ETF and want one more large-cap variant. It is limiting if you are trying to build an income stream from companies the large-cap dividend crowd never touches. Three funds widen that aperture: WisdomTree U.S. MidCap Dividend Fund (NYSEARCA:DON), WisdomTree U.S. SmallCap Dividend Fund (NYSEARCA:DES), and VictoryShares US Large Cap High Div Volatility Wtd ETF (NYSEARCA:CDL).
Two of the three are outpacing the S&P 500 outright this year. The SPDR S&P 500 ETF Trust is up 8% year to date, while DES has returned 14% and CDL has returned 11%. The third, DON, is up 6% and trailing slightly, but it earns its spot for a different reason explained below. CDL is also the yield leader, distributing roughly 3.4% on a trailing basis.
Why look past the S&P 500 for dividend income
The S&P 500’s dividend yield is anchored by a handful of mega caps that prioritize buybacks. Mid-cap and small-cap dividend payers are usually mature businesses with steadier payout ratios and less buyback dilution math to manage. They also trade at lower multiples, so a similar payout funds a higher yield. And a volatility-weighted screen on large caps deliberately demotes the heaviest mega-cap names, producing an income mix that looks nothing like the cap-weighted benchmark. Each of these three funds takes one of those routes.
DON: mid-cap dividends, weighted by dollars paid
DON tracks the WisdomTree U.S. MidCap Dividend Index, a rules-based universe of mid-cap U.S. companies that pay regular cash dividends. The hook is the weighting method: instead of market cap, holdings are weighted by the dollar amount of dividends each company pays. A mid cap distributing $400 million annually gets more weight than one distributing $100 million, even if their market caps are similar. The mechanism connecting this fund to the theme is direct: more of your money sits in companies that actually cut large checks to shareholders.
The analyst who called NVIDIA in 2010 just named his top 10 stocks and VictoryShares US Large Cap High Div Volatility Wtd Index ETF wasn’t one of them. Get them here FREE.
The portfolio leans toward financials, industrials, real estate, and utilities, sectors underweighted in the S&P 500. Distributions arrive monthly, with a year-end variable payment that typically lands in late December. DON paid $0.23369 on the December 26, 2025 ex-date, a notable bump above the regular monthly amounts that ranged from a few cents to roughly $0.18 through the year. Total 2025 distributions worked out to a trailing yield in the low-2% range on the current $54 share price.
The honest tradeoff: DON has lagged the S&P 500 over the past one, five, and ten years, including a 11% one-year return against the index’s 24%. Mid caps have been out of favor while mega-cap tech has carried the benchmark. DON’s case rests on diversification and a smoother ride when leadership rotates.
DES: small-cap dividends, the year’s surprise winner
DES applies the same dividend-weighted methodology one rung down the size ladder, screening U.S. small caps that pay regular dividends. That screen is the whole point: most small-cap ETFs drag along non-earners and money-losers that dilute returns. Requiring a cash dividend filters for businesses that already generate enough free cash flow to share it.
That filter is paying off in 2026. DES’s 14% year-to-date gain is well ahead of the S&P 500 and ahead of broad small-cap benchmarks that include unprofitable names. Over the past year, the fund is up 22%, finally narrowing the gap that opened during the 2022 through 2024 mega-cap run.
Distributions are monthly with a December top-up. The year-end 2025 payment was $0.20938, and 2025 totaled around $0.92 per share, putting trailing yield in the mid-2% range on the $37 share price. The tradeoff is the asset class itself. Small-cap dividend payers can swing harder than large caps in a credit-tightening event, and the December special payment makes the income stream lumpier than a typical large-cap fund. For investors comfortable with that profile, DES is the most differentiated income exposure of the three.
CDL: large caps, but not the ones you already own
CDL is the contrarian pick on the list. It is technically a large-cap fund, but its index methodology pulls it sharply away from the S&P 500. The fund screens for the 100 highest-yielding U.S. large caps that have paid dividends for at least four consecutive quarters, then weights them by inverse volatility. Lower-volatility stocks get more weight, higher-volatility ones get less. The result is a portfolio that systematically underweights the mega-cap growth names dominating the S&P 500 and overweights utilities, staples, healthcare, and other steady payers.
Two things follow. First, the yield is genuinely high for a U.S. large-cap product. Trailing twelve-month distributions through May totaled $2.47 per share, which on the $75 share price works out to a roughly 3.3% yield, the highest of these three funds. Second, CDL pays monthly with a meaningful December distribution. The December 11, 2025 payment of $0.4556 was several times larger than typical monthly amounts.
Performance has held up: CDL is up 11% year to date and 17% over one year. The tradeoff is what you give up. A volatility-weighted high-yield screen will lag badly when mega-cap tech leads, because by design CDL holds very little of it. That is the bargain you accept for income and diversification.
Which one fits which investor
For someone already owning a large-cap dividend core like SCHD or VIG, DES is the most additive. Small-cap dividend payers have almost no overlap with those funds, and the dividend screen filters out the speculative junk that makes broad small-cap ETFs hard to own for income. DON plays a similar diversification role one size tier up and pairs well alongside DES if mid caps are also underrepresented in the portfolio. CDL is the right pick for an investor who wants the highest current yield of the three and is willing to lag in a tech-led market in exchange for monthly income and lower volatility. None of these should replace a large-cap dividend core. They extend it into territory the typical S&P 500 dividend investor never sees.
The analyst who called NVIDIA in 2010 just named his top 10 AI stocks
This analyst’s 2025 picks are up 106% on average. He just named his top 10 stocks to buy in 2026. Get them here FREE.
