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ETF Specialist

This Dividend ETF Effectively Balances Yield and Quality

Its quality screen mitigates some of the risks associated with yield investing.

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In an environment where trillions of dollars worth of assets sport negative yields, investors want reliable sources of income. But reaching for yield is risky business. It would be wise not to overreach.

FlexShares Quality Dividend ETF (QDF) targets higher-yielding stocks while anchoring on quality. Its quality orientation should help it weather downturns better than its large-value Morningstar Category peers. In combination with its cost advantage relative to its category competition, this defensive tilt should help it outperform the Russell 1000 Value Index over the long term. Under our new ratings framework, which places a greater focus on fees and benchmark-relative performance, we are upgrading the exchange-traded fund's Morningstar Analyst Rating to Silver from Bronze.

Venkata Sai Uppaluri does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.