SSgA expands range of high yield ‘Dividend Aristocrats’ SPDR ETFs

Feb 28th, 2012 | By | Category: Equities

S&P Indices has announced the launch of the S&P UK High Yield Dividend Aristocrats and S&P Euro High Yield Dividend Aristocrats Indices. Both indices have been licensed to SSgA for the creation of SPDR ETFs, the SPDR S&P UK Dividend Aristocrats ETF (UKDV) and the SPDR S&P Euro Dividend Aristocrats ETF (EUDV).

SSgA expands range of high yield 'Dividend Aristocrats' SPDR ETFs

SSgA has expanded its range of high yield 'Dividend Aristocrats' SPDR ETFs with the launch of UK and European funds.

The S&P UK High Yield Dividend Aristocrats and S&P Euro High Yield Dividend Aristocrats indices measure the performance of the highest dividend-yielding UK and eurozone companies, respectively, within the S&P Europe Broad Market Index.

Among other criteria, a company must have increased dividends or maintained stable dividends for at least ten consecutive years to qualify for inclusion in the indices.

Alka Banerjee, Vice President at S&P Indices, said: “Traditionally, dividends constituted only about a third of total equity returns. But the current economic climate of sluggish growth suggests that dividend-producing stocks serve an important purpose for many investors because they are usually more resilient than other asset classes in a falling market. Both of these new indices have been designed to measure high-yielding dividend stocks, without compromising on sustainability and growth.”

Eleanor Hope-Bell, Head of UK and Northern Europe Sales, SSgA, explains: “With current market volatility and low interest rates, we have experienced substantial demand in our US and emerging market dividend SPDR ETFs. Our clients have asked for similar strategies in other regions.

“While other dividend indices tend to focus only on high dividend yields, the Dividend Aristocrats indices look beyond pure yield to sustainable and quality yield, providing access to companies that have a long track record of consistently paying dividends.”

The index methodology incorporates criteria for dividend payout ratio and maximum indicated dividend yield, thereby excluding companies whose future dividend payout may be considered less sustainable.  To give preference to companies with higher dividend yields, the indices are weighted by the stock’s indicated annual dividend yield.

The UK fund’s top five holdings are Imperial Tobacco, British American Tobacco, BAE Systems, SSE and Vodafone. The top two weighted sectors, Industrials and Consumer Staples, make up over 52% of the fund.

The Euro fund is slightly more diversified on a sector basis, with Industrials and Financials, the top two sectors, adding up to just over 44%. Its top five holdings are Munich Re, E.ON, Groupe Casino, Total and Corio.

Both funds are listed on the London Stock Exchange and have a Total Expense Ratio (TER) of 0.30%.

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