Dividend weighted indices

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Main article: Alternative indices

Dividend weighted indices are calculated by a number of familiar index providers, including Dow Jones, MSCI, and S&P. FTSE [1] and Indxis (formerly Mergent) [2] also create customized and proprietary dividend indices for investment management companies' products (index funds and ETFs). Wisdom Tree creates its own proprietary dividend indices for its dividend ETFs.

Dividend weighted indices usually screen and weigh their stock holdings on the basis of either yield or dividend growth. Most dividend indices occupy the Screened security selection/ Fundamental security weighting segment of the Index Strategy Box, although it is important to note that a number of indices, while screening securities according to dividend yield or dividend growth, weigh their holdings by market capitalization (Screened/Capitalization). Both of the Vanguard dividend index funds are based on market capitalization indices.

Dividend Weighted Index Strategy Box.png Social Responsibility Index Strategy Box.png
Index Strategy Box [3] Index Strategy Box [4]

History

The advent of dividend weighted indices occurred in the first decade of the twenty-first century. Mergent (Indxis) has provided customized indices since 2000. Dow Jones and S&P began creating indices in 2003; MSCI and Wisdom Tree indices began in 2006, as did the customized FTSE index.

Characteristics

Portfolio concentration

Screened dividend weighted indices tend to hold a smaller number of stocks than do benchmark capitalization indices. The Dow Jones Select Dividend Indices, the S&P dividend indices, and the Indxis indices (tracked by Powershares) all hold 100 or fewer stocks. Wisdom Tree proprietary indices hold between 80 - 2000 stocks. The Indxis Dividend Achievers Select Index, the customized index tracked by Vanguard, holds 100 - 500 stocks. The FTSE High Dividend Yield Index (tracked by Vanguard) holds between 500 - 1500 stocks.

Performance


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Investment options

The following table lists fund companies offering dividend index funds and ETFs. Wisdom Tree offers a wide range of US and international dividend ETFs based on a wide selection of proprietary dividend indices.

Dividend Index Funds
Fund Group Funds Index Strategy Box
Blackrock Ishares Dow Jones Select Dividend Index Fund (ETF)

Dow Jones EPAC Select Dividend Index Fund

Dow Jones U.S. Select Dividend Index

Dow Jones EPAC Select Dividend Index

Screened/Fundamental

Screened/Fundamental

Guggenheim S&P Global Dividend Opportunities Index (ETF) S&P Global Dividend Opportunities Index Screened/Fundamental
Powershares High Yield Equity Dividend Achiever Portfolio (ETF}

International Dividend Achievers Portfolio (ETF)

Indxis Dividend Achiever 50 Index

Indxis International Dividend Achievers Index

Screened/Capitalization

Screened/Fundamental

State Street Global Advisors SPDR S&P Dividend (ETF)

SPDR S&P International Dividend (ETF)

S&P High Yield Dividend Aristocrats Index

S&P International Dividend Opportunities Index

Screened/Fundamental

Screened/Fundamental

Vanguard Dividend Appreciation Index Fund (Fund/ETF)

High Dividend Yield Index Fund (Fund/ETF)

Indxis Dividend Achievers Select Index

FTSE High Dividend Yield Index

Screened/Capitalization

Screened/Capitalization

Wisdom Tree Wisdom Tree ETFs Wisdom Tree Indexes Screened/Fundamental

See also

References

External links

Index providers

Dividend weighted index methodologies