Advisor clients have myriad goals and needs for their portfolios — but this year, delivering on them has gotten more complicated. Events in the Middle East will likely spur inflation for the rest of 2026. Meanwhile, market anxiety about the AI revolution’s profitability continues. Advisors are asked to help clients meet those goals while also, for those at or near retirement, adding income. The small-cap dividend growth ETF SMDV aims to do both, in one ETF package.
Key Takeaways:
- Investors look to the ETF wrapper for a variety of uses, from income to growth and everything in between.
- As volatility rises, ETF tools become increasingly important, with no end in sight to volatility-driven inflation.
- Small-cap dividend growth ETF SMDV may have a role to play by combining upside and dividends.
The ProShares Russell 2000 Dividend Growers ETF (SMDV ) charges a 40 basis point fee for its approach. According to ProShares, it is the only ETF exclusively focused on Russell 2000 companies with growing dividends for at least 10 consecutive years. The dividend growth ETF targets small-caps with healthy earnings and fundamentals, as well as demonstrated dividend growth.
The strategy has delivered on its goal of providing growth for its investors with that approach. SMDV has outperformed the ETF Database Small Blend Equities Category average YTD, as well as over the last five years. Specifically, the fund has returned 11.29% YTD, per ETF Database data, beating the category’s 10.19% return in the same time period.
Looking At SMDV Advantages
That may speak to the ETF’s advantages during market turbulence. Already this year, the S&P 500 has seen a big drop, and only recently has it recovered. SMDV has outperformed the S&P 500 amid those tough periods, particularly in March. The strategy saw its price rise above both its 50- and 200-day simple moving averages as of early April, too, indicating momentum — and a potential buy opportunity.
Of course, the strategy also looks to deliver on another objective: providing dividends and income. SMDV provides quarterly distributions, according to ProShares. The strategy provided a 12-month yield of 2.51% as of March 31 and has grown its dividend at a compound annual growth rate of 10.2% since its inception, according to ProShares data.
What kind of stocks has that led the fund to, and what might its overall outlook be for the rest of 2026? Its top performer, Power Integrations, Inc. (POWI), has returned a remarkable 100.4% YTD, with its focus on semiconductors. Together, the strategy’s combination of upside and dividend growth, and its unique emphasis on rising dividends, could make it one to watch.
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