David A. Gaffen in the Marketbeat blog at WSJ.com notes the news that number of S&P 500 companies that pay a dividend is back on the rise.

Investors have increasingly benefited from dividends in the last few years, even if the number of companies in the S&P 500 that dutifully dole out the payments remain below levels seen in the 1980s and ’90s. In 2005, 77.2% of S&P 500 components paid dividends, compared with 70.2% in 2001 and 2002. Jeff Kleintop, chief investment strategist at PNC Global Markets, says dividends should continue to regain stature at a time when price appreciation in stocks isn’t likely to approach the levels during the market’s historic bull market.

Now that dividends seem to back in vogue the rush of dividend related ETFs are on the rise. Now the somewhat secretive WisdomTree Investments is jumping into the ETF arena and more specifically the dividend ETF arena with both feet.

John Spence at Marketwatch.com reports on the filing for 20 new funds targeting various domestic and international dividend related funds. Apparently WisdomTree has developed proprietary indices upon which these funds will be based.

While the rise of the dividend is a welcome development for investors, it will be interesting to see what happends to all of these dividend funds and WisdomTree specifically. The initial attraction of ETFs was that they simplified an investor’s life by providing broad asset class, index funds at a low cost with the trading flexibility of stocks.

Now that proposition has been turned on its head. The trend is towards funds based on narrowly defined indices, oftentimes proprietary or quasi-active in nature, with higher fees and turnover. While we would never come out against greater choice it is not necessarily clear that this will be a welcome development for the vast majority of investors.