What are select dividend indices?
These measure the best performing stocks based on their dividend yield performance. They look for consistently high-yielding stocks. Some, such as the S&P Global Dividends Opportunity Index, consider aspects such as liquidity.
Where have you heard about select dividend indices?
Each stock market has its own select dividend index, so you might have heard of the S&P Dow Jones Dividend Indices or the STOXX Select Dividend Indexes. As an investor, dividend consideration is likely to play a major part in your investment strategy. Firms that pay out regular cash or shares to investors could be a major driver of portfolio growth. But past performance is no guarantee of the future.
What you need to know about select dividend indices.
The indices may contain any number of stocks, although rarely more than 100. The stocks are chosen based on factors like dividend per share growth rate, dividend payout percentage rate and average daily trading volume. Components are then weighted according to dividend yield.
Main dividend indices include the Dow Jones US Select Dividend Index (weighted by dividend yield); the S&P Global Dividends Opportunity Index (containing roughly 100 high-yielding stocks); the FTSE All-World High Dividend Yield Index (based on forecast dividend yield ranking) and the S&P 500 Dividend Aristocrats Index (containing companies that have raised their dividends for at least 25 consecutive years).