A Dividend ETF That Merits a Look

If you have done any research on exchange-traded funds in the last few months, you've probably glanced at more than a few so-called dividend ETFs, that is, funds designed to one way or another have a higher yield than that of the broad market.

Some of my past articles have likely contributed to the glut of dividend ETF information out there, but there is one fund I know about that gets almost no notice, no news coverage and virtually no volume: the First Trust Morningstar Dividend Leaders Index Fund (FDL Quote).

This fund could be poised for good growth over the next year, especially because of its unique weighting toward mega-cap stocks, and I believe it deserves attention.

The ETF's prospectus states that its stock-selection process is proprietary, but that for a stock to be considered, it must pay dividends that are qualified for the 15% tax rate, have five years of dividend growth "greater than or equal to zero" and have a coverage ratio greater than 1. From there, the description gets even more opaque. ...