Morningstar’s Dividend ETF Is Kind of Perfect for Retirees Right Now
FDL has handed retirees growing income and strong returns for nearly two decades, but the fund comes with a concentrated bet and a quarterly payout quirk that can wreck a fixed expense budget if you are not prepared for it.
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A retiree living off a portfolio needs income that keeps coming. The First Trust Morningstar Dividend Leaders Index Fund (NYSEARCA:FDL) has paid distributions four times a year since 2006. FDL tracks Morningstar’s dividend leaders index, a rules-based basket of established U.S. companies with long payout records. The quarterly checks change size, and that matters for anyone paying fixed bills with them.
A $7 Billion Fund Built on Dividend Payers
First Trust runs FDL, and it is a large, established fund with $7.3 billion in net assets in its June 30, 2026 filing. The fund owns dividend-paying stocks and passes along what those companies pay, so its income moves with the holdings’ own payouts.
Returns Have Rewarded Patient Holders
Shares traded near $50 on Oct. 14. The fund is up 17% year to date and 23% over the past year.
The longer record also holds up. FDL returned 88% over five years and 187% over ten. For a retiree, that history shows a fund that grew principal while paying out income, which is the main promise of a dividend strategy.
Quarterly Checks That Change Size
The most recent distribution was $0.5139 per share, ex-dividend Sept. 24, 2026. The one before it paid $0.4732 per share, ex-dividend June 25, 2026.
Over the trailing twelve months, FDL paid $1.9375 per share.
In 2026, the three payments came in at $0.4005 in the first quarter, $0.4732 in the second and $0.5139 in the third. Each check was a different size.
In recent years, the first-quarter payment has been the smallest. In 2025, the March payment of $0.3573 was the lowest of the year, and the December payment reached $0.5499.
A retiree taking income from FDL will get a different amount each quarter. Anyone meeting fixed monthly expenses with it needs a cash reserve for the leaner months. That is the whole problem our free Paycheck Portfolio method was built to solve, turning uneven payouts into something that acts like a steady paycheck. Planning around it is simple once you expect it.
Six Stocks Make Up a Large Share of the Fund
FDL is built to be concentrated, and its top positions make up a large share of net assets. The six largest holdings in the latest filing were:
| Holding | Share of Net Assets |
|---|---|
| Chevron (NYSE:CVX | CVX Price Prediction) | 7% |
| Verizon (NYSE:VZ) | 7% |
| Philip Morris (NYSE:PM) | 6% |
| Pfizer (NYSE:PFE) | 6% |
| PepsiCo | 5% |
| Altria | 5% |
Two tobacco companies, Philip Morris and Altria, are among the largest positions. Investors who screen out tobacco should know they are there.
Past the top names, the portfolio leans toward energy, telecom, pharmaceuticals, consumer staples, utilities and banks. It is a value-oriented income portfolio. Investors who want growth exposure will find little of it here.
Recent Trading Matters Less Than the Income
FDL is down 3% over the past month, though it has gained 2% over the past week and 0.2% early in Wednesday’s session. For a retiree, these swings matter less than whether the underlying companies keep paying dividends.
Where FDL Fits in a Retirement Portfolio
FDL fits a retiree who wants equity income from large, established companies. That investor also has to handle uneven quarterly payments and accept that most of the money sits in a handful of sectors. For that investor, the fund delivers on its core appeal: real profits this year and four checks a year from recognizable businesses.
It fits less well as someone’s only holding, because of that focus. It also fits poorly for anyone who needs same payments on a fixed schedule.
The fund’s expense ratio is a real cost for a long-term holder, so check it with First Trust before deciding. The holdings above come from the June 30 filing and will have changed since.
Contact [email protected] for any questions or corrections.
AJ spent 10 years writing about financial markets at The Motley Fool. His coverage centers on technology stocks and the broader macroeconomic trends, from interest rates to geopolitics, that shape where markets are headed next. AJ is drawn to the stories where big-picture economics and individual companies collide.
