Dow Jones Global Select Dividend Index Fund (FGD) maintains a broader scope than FDD, with all component companies of 24 developed market country benchmarks comprising the index universe. In order to be eligible for inclusion, companies must: 1) pay a current dividend, 2) have a current-year dividend-per-share ratio that is greater than or equal to its five-year average annual dividend-per-share ratio, and 3) have a five-year average payout ratio of less than or equal to 60% for U.S. and European companies; or less than or equal to 80% for all other countries.
Morningstar Dividend Leaders Index Fund (FDL) tracks a benchmark composed of stocks that have shown dividend consistency and dividend sustainability, as identified through a proprietary, multi-step screening process. FDL’s largest holdings consist of several mega cap stocks, including AT&T, Merck, Verizon, and Kraft.
The index underlying the Value Line Dividend Index Fund (FVD) relies on both Value Line rankings and distribution yields to determine component companies. From stocks given a ranking of #1 or #2 using the Value Line Safety Ranking System, those with a higher than average dividend yield are selected for inclusion. Dividend yields higher than the S&P 500 qualify as above average.
iShares Dividend ETFs
Not surprisingly, iShares offers two of the most popular dividend ETF options, including one fund limited to domestic stocks and another with an international focus.
Dow Jones International Select Dividend Index Fund (IDV) tracks the Dow Jones EPAC Select Dividend Index, a benchmark that consists of equities from more than a dozen developed economies that provide relatively high dividend yields on a consistent basis over time. IDV’s largest sector allocations are given to financials, industrials, and utilities, a common occurrence among dividend funds.
Dow Jones Select Dividend Index Fund (DVY) is inked to the Dow Jones U.S. Select Dividend Index, this ETF invests in about 100 companies that are screened by dividend per share growth rate and dividend payout percentage and selected based on dividend yield.
Other Dividend ETF Options
Beyond these funds, there are several additional ETF options for the dividend seeking investor:
▪ ELEMENTS Dogs Of The Dow (DOD) is linked to the Dow Jones High Yield Select 10 Total Return Index, a subset of the Dow Jones Industrial Average. Each December, the thirty stocks in the Dow Jones Industrial Average are ranked by indicated annual dividend yield. The ten stocks with the highest indicated annual dividend yield are then selected as Index components.