A frequently used introduction to articles and conversations about mid-cap stocks and exchange-traded funds is that this realm of the equity market is often overlooked relative to large caps and smaller stocks.

Dividends Within The Cap Spectrum

Rather than focusing on the well-known fact that investors gloss over mid-caps, those mulling stakes in mid-cap exchange-traded funds — meaning they have likely gotten over the ignoring mid-caps part — remember the advantages stakes in the cap spectrum offer while considering the perks dividends bring to mid-cap strategies.

In what is turning out to be a good for mid-caps, the WisdomTree MidCap Dividend Fund (ETF) (NYSE: DON) is outperforming traditional mid-cap indexes. Again. As is the case with smaller stocks, adding dividends to the mid-cap mix can prove highly advantageous for investors.

Related Link: A Small-Cap Dividend ETF Keeps Proving Its Worth

A Closer Look At DON

DON is up 14.8 percent year-to-date compared to a gain of 12.1 percent for the S&P MidCap 400 Index. The WisdomTree offering has also been 220 basis points less volatile than the widely followed mid-cap benchmark and is doing so with a higher dividend yield, underscoring the advantages of DON's dividend-weighted methodology.

Although DON is passively managed, its underlying “index is dividend weighted annually to reflect the proportionate share of the aggregate cash dividends each component company is projected to pay in the coming year, based on the most recently declared dividend per share,” according to WisdomTree.

Allocations

Most of DON's financial services weight goes to real estate stocks. Utilities and industrials combine for about a third of DON's weight. Combine the real estate exposure and the utilities weight, and it is not surprising that DON is benefiting as the Fed moves away from boosting interest rates this year.

Over the past decade, DON has topped 94 percent of rival funds in the Morningstar Mid-Cap Value category.