The S&P 500 ($SPX) has put up a respectable 17.33% gain in 2025, but the ride hasn’t been perfectly clean. Ongoing tariff headlines and a weaker dollar have muddied the backdrop, raising fresh questions about where the next leg of meaningful returns will actually come from.
That’s why the First Trust STOXX European Select Dividend Index Fund (FDD) has become such a timely talking point. It’s a dividend-focused fund that sits right in the lane of Europe’s cash-heavy sectors and pays meaningful income while still having room to surprise on performance.
With First Trust up roughly 55% in 2025 and comfortably ahead of the S&P 500, it has turned from a niche income vehicle into one of the year’s standout performers. The real question now, after such a strong run, is whether First Trust is still worth buying before 2026 rolls around or has most of the upside already been claimed? Let’s dive in.
Overview of First Trust STOXX European Select Dividend Index Fund (FDD)
The First Trust STOXX European Select Dividend Index Fund is built around a clear focus on high-dividend European stocks. It tracks the STOXX Europe Select Dividend 30 Index using a smart beta approach rather than active management and has followed this playbook since its inception.
The fund sits firmly in the equity bucket with long-only exposure, aiming to hold a concentrated list of established European names with above‑average yields and simply pass their dividend income through. That structure keeps the emphasis on consistency and income, not on rapid style shifts or short-term bets.
Coming from the First Trust Portfolios family, the fund leans into a compact portfolio of just 34 holdings, but the top slice is where most of the weight lies, with the top 10 positions making up 42.12% of assets. At the top of the list is ABN Amro Bank N (ABN.NA) at 5.21%, followed by Aker BP ASA (AKRBP.O.DX) at 5.09%, Legal & General G. (LGEN.LN) at 4.48%, and NN Group (NN.NA) at 4.08%.
Rounding out the major stakes are Rio Tinto Plc (RIO.LN) at 3.98%, Taylor Wimpey Plc (TW-.LN) at 3.98%, A.P. Moeller - Maersk A/S (Class A) at 3.90%, ORLEN SA (ORLNY) at 3.86%, Rubis (RUI.FP) at 3.81%, and Investec Plc (INVP.LN) at 3.73%. Put together, that mix highlights a tilt toward banks, energy, infrastructure, and materials.
On the size and cost side, the fund oversees about $667,748,000 in managed assets and charges a 0.58% management fee, which sits in line with what many specialized international equity products ask for.
As of Dec. 15, the fund trades around $17 per share, with a year-to-date (YTD) gain of 51% and a 52-week return of 48%.
It currently pays an annual dividend of $0.82 with a 4.77% yield, while weekly trading volume stands at 290,275, keeping activity strong.
Why Europe’s Dividend Sectors Are Rising
FDD’s 2025 surge lines up neatly with what has been happening on the ground in Europe, where growth is hardly booming but is clearly moving in the right direction. Eurozone output rose 0.2% in the third quarter and was 1.3% higher than a year earlier, even with Germany and Italy stuck at zero growth and flirting with recession territory.
That kind of “modest but positive” backdrop tends to suit the kind of steady, cash-generative names FDD holds in banks, energy, infrastructure, and materials, where the story is more about resilience and dividends than breakneck expansion.
Monetary policy has also been quietly supportive. The European Central Bank (ECB) has kept its deposit rate parked at 2% for three straight meetings after cutting it down from 4%, a deliberate shift away from fighting runaway inflation toward maintaining a “good place” for the economy as headline inflation cooled to 2.2% in September, just above its 2% target. That helps lower funding costs and stabilizes the environment for banks and capital-intensive businesses, which sit at the core of FDD’s portfolio.
Conclusion
FDD has already done the hard part in 2025, rising about 51% YTD. So yes, buy before 2026 only if you want European dividend exposure. It is not a “catch-up” trade. After a run like this, the clean approach is to add piecemeal (or wait for a pullback) rather than going all-in at once. Most likely, shares drift higher over time but with sharper pullbacks as the pace cools from 2025’s breakout.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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