First Trust Dividend Strength ETF

First Trust Dividend Strength ETF (FTDS) is an index fund that tracks The Dividend Strength Index from Nasdaq. The index holds 50 dividend-paying companies that pass balance-sheet and dividend-growth screens, with each held in equal amounts. Its 0.70% expense ratio is far above the 0.27% average of the similar funds it was compared with. Its net assets were about $36.8 million as of June 30, 2026, which makes it much smaller than dividend funds such as SCHD or VYM.

• Over the year to Oct 27, 2026, FTDS returned +22.7%, 2nd of 7 among similar funds.
• Its 5-year annualized return was +8.0% and its 10-year +11.7%.
• In the 2020 COVID crash it fell 42.5% and regained its old high 7.7 months after the low.
• Its worst full calendar year was 2022 (-13.6%); its best was 2021 (+24.8%).
• The deepest fall in its price history was 42.5% (Feb 19, 2020 to Mar 23, 2020), recovered by Nov 11, 2020.

As of Jun 30, 2026, the fund held 50 securities; the ten largest made up 22.24% of assets.

By sector

• Over the three months to Jun 30, 2026, investors added a net $6.0M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +3.05%, -4.63%, +3.75%.

FTDS is passively managed. It aims to match the price and yield of The Dividend Strength Index, before fees. Nasdaq, Inc. owns and maintains the index. The fund normally keeps at least 90% of its net assets in the index's stocks and at least 80% in dividend-paying securities. The starting pool is the Nasdaq US Benchmark Index, a broad index of US stocks weighted by market value.

To qualify, a company must pass size and liquidity tests and five financial screens. Its long-term debt must be below 40% of its market value. Its shareholder equity must be positive. Its return on equity (profit as a share of shareholder equity) must be above 10%. Its dividend must have grown more than 5% a year over five years. Its payout ratio (the share of earnings paid out as dividends) must be under 50%. The index then ranks the companies that pass by dividend yield within each industry. It pools the top 15 from each industry and picks the 50 highest yielders.

Each stock gets an equal weight. As of June 30, 2026, Commerce Bancshares (2.25%) weighed slightly more than Johnson & Johnson (2.16%). The index is rebuilt every quarter, and the fund follows soon after. The prospectus reports portfolio turnover of 132%. That level of trading can add costs that the expense ratio doesn't show. The fund held no derivatives as of June 30, 2026.

• FTDS charges 0.7% a year, versus an average of 0.27% for the similar funds below (7th of 7, cheapest first).
• Of that, 0.5% is the management fee; the rest covers other fund expenses.
• The fee includes a 0.11% waiver from the adviser, which may end.

An equally weighted, 50-stock dividend fund with a 0.70% fee and heavy sector tilts fits better as a smaller addition alongside a broad core fund than as the core itself.

FTDS could add a tilt toward profitable dividend payers with modest debt, but it has had sharp drops. In the 2020 COVID crash it fell 42.5% between February 19 and March 23, 2020. It regained that loss by November 11, 2020, about 7.7 months later. In the 2022 bear market it fell 21.5% and took 17.3 months, until March 2024, to recover. Its worst calendar year from 2016 through 2025 was 2022, a loss of 13.75%. Its price history doesn't cover 2008. Someone who had to sell shares in a bad year could have sold well below the fund's peak.

Its income is modest: the trailing 12-month yield was 1.59% as of October 27, 2026, paid quarterly. The 0.70% expense ratio takes a large share of that yield. Past results don't predict the future, and a plan should look at the whole portfolio, not one fund.

Matched by closest holdings overlap from the latest N-PORT reports (no similar fund shares 20% or more of its holdings).