FTSE High Dividend Yield Index
FTSE Group has worked with Vanguard to create a FTSE High Dividend Yield Index, which will serve as the basis for the High Dividend Yield Index Fund from Vanguard. Both traditional Investor shares and ETF shares will be available.
The new custom index consists of stocks that are characterized by higher-than-average dividend yields, and is based on the U.S. component of the FTSE Global Equity Index Series (GEIS). Real estate investment trusts (REITs), whose income generally do not qualify for favorable tax treatment as qualified dividend income (QDI) are removed, as are stocks that have not paid a dividend during the previous 12 months. The remaining stocks are ranked by annual dividend yield and included in the target index until the cumulative market capitalization reaches 50% of the total market cap of this universe of stocks.
The index’s methodology holds the potential of durable high yields from solid companies, with lower weightings to companies that have high yields because of low or falling share prices. In addition, the index has the potential for greater tax efficiency because of low turnover and a high proportion of its dividends meeting the criteria for QDI.
For more information about FTSE's custom index capabilities please contact your local Client Services representative.
For more information about the FTSE High Dividend Yield Index please contact Vanguard.