|New Dow Jones Dividend Indices Focus On Forecasts|
|05 April, 2012|
Dow Jones Indexes has launched a new range of dividend indices that will rank companies by their expected dividends.
The Dow Jones Forecasted Dividend Plus suite has been licensed to UniCredit to serve as the basis for tracker certificates that will be listed in Germany.
There are four indices in the new range: a regional index for Europe and three country indices covering France, Germany and the United Kingdom. The Europe index comprises 40 stocks, while the country indices are made up of 20 securities.
The new indices are derived from the Dow Jones Europe Index, with stocks on the parent index reweighted according to their forecasted dividend yield, ratio of forecasted dividend to three-year average dividend and the three-month percentage change in their stock price.
To qualify for inclusion, however, they must also meet certain other criteria. This includes having: a minimum three-month average daily trading volume of US$10 million for the Europe index and $US5 million for the country indices; non-negative 12-month earnings per share; a dividend yield greater than zero for the past three years; and a forecasted dividend yield greater than zero.
Deborah Ciervo, senior director of international markets and products at Dow Jones Indexes, said the recent market environment had led to an increase in demand for dividend-based products. “There has clearly been a trend towards more dividend-based strategies, especially over the last year. One of the reasons for this may be the income enhancing potential of stable dividend payments that may attract investors, given the market turmoil.”
Stoxx also launched a European index which incorporated expected dividends into the weighting methodology towards the end of last year.