Small-Cap Dividend ETFs

Small caps and dividends are two separate investment strategies that investors have used in order to get higher returns - but what if you combine them?
There are a few small-cap dividend ETFs. The WisdomTree SmallCap Dividend ETF (NYSEARCA: DES) is the oldest with an inception date of 06/16/2006. The WisdomTree U.S. SmallCap Dividend Growth ETF (Nasdaq: DGRS) created on 07/25/2013 is the second oldest. ProShares Russell 2000 Dividend Growers ETF (NYSEARCA: SMDV) was created on 2/3/2015, and the O'Shares FTSE Russell Small Cap Quality Dividend ETF (NYSEARCA: OUSM) is the newest which started on 30/12/2016.

Chart sourced from ProShares by Ned Davis Research using data from the Russell 3000 index.
Dividend growers and payers have had higher performance and lower volatility compared to non-payers and dividend cutters as the chart above shows.
Since OUSM is so new, it won't be included in the charts. As you can see below, SMDV has clearly outperformed other small-cap stocks (IWM) and small-cap dividend stocks since it was created. It is also more defensive (note the drawdown of the other ETFs in 2016).
DGRS Total Return Price data by YCharts
If you exclude SMDV to get a longer look back, you'll see that both the WisdomTree ETFs offer similar performance to each other and seem to match other small-cap stocks as measured by IWM, although slightly more defensive. It might offer the potential to have less drawdown during a major correction as... Read more