) -- One of the first categories of specialized exchange traded funds was dividend ETFs, with the first one popping up in late 2003. Since then, many other ETF providers have created dividend ETFs, including


, whose founding was solely based on the category.

I've written quite a few articles about broad-based dividend ETFs, each with the same refrain: Watch the financial sector exposure. Regardless of the methodology, most of the funds had 30% to 40% weightings in the industry when they debuted a few years ago versus roughly 20% for the S&P 500 Index. Owning a fund with 40% in financial stocks isn't necessarily a bad thing. But if your other funds have a large chunk in financials, then you'll be overexposed.

The case for dividends is compelling for long-term investors. The stock market has had an average annual return of roughly 10% over the long term, about 40% of which has been generated by dividends. If dividends produce a big piece of an investor's returns, he'll be able to sleep peacefully, as his risks are reduced. The investor won't have to expect too much from price appreciation.

After the latest financial crisis, many

dividend funds

now have much smaller weightings in financials, making them more balanced and, perhaps, less risky than they used to be.

A case in point is the

iShares DJ Select Dividend Fund

(DVY) - Get Report

, which was the first dividend-centric fund. Five years ago, the fund's weight in financial stocks was 40%; today it's 14%. The reason for the drop is simple: Many financial companies no longer pay dividends, and those that do, pay much less than they used to be. Utilities are now the largest sector in the fund, at 24%, followed by industrials at 20% and consumer goods 17%. Just as financials at 40% were an extreme overweight back then, utilities are an extreme overweight today, as is basic materials at 10% of the fund versus 3% for the S&P 500.

A crisis in the utility sector is unlikely but 20% of an entire portfolio in the industry would risk exposure to an unforeseen event.

Another fund relevant to the conversation is the

PowerShares International Dividend Achiever Portfolio

(PID) - Get Report

. The fund currently has 30% in financials versus 41% when it was first listed four years ago. The reason for the smaller decline in the financial-stock weighting is that the fund has always been relatively heavy in the five large Canadian banks, which held up much better through the crisis, thanks to being more conservative. Thus, none had to cut its dividends.

The outperformance of the PowerShares International Dividend Achiever Portfolio also captures the general outperformance of foreign stocks over domestic in the past few years and the weakness in the U.S. dollar. If dividend-centric ETFs fit in to your financial plan, it makes sense to allocate a portion to a foreign dividend fund like PowerShares International Dividend Achiever Portfolio.

At the time of publication, Roger Nusbaum had no positions in the securities mentioned.

Nusbaum is a portfolio manager with Your Source Financial of Phoenix, and the author of Random Roger's Big Picture Blog. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Nusbaum appreciates your feedback;

click here

to send him an email.