Morningstar Inc. has launched an index that allows income-focused investors to prioritize dividend yield.
   The investment research company has created the Morningstar Dividend Leaders Index, a diversified portfolio of the 100 highest yielding stocks. The index will reflect companies that have a consistent history of paying dividends and the ability to sustain their dividends. The index favors companies that are expected to have enough future earnings to cover their dividend costs.
   In a related development, Morningstar announced that First Trust Advisors L.P., an investment advisory firm in Lisle, Ill., has licensed the index for the purpose of using it to launch an exchange-traded fund.   
   "Generating income is an important, yet overlooked, component of total return," said Don Phillips, managing director of Morningstar. "After a prolonged infatuation with capital appreciation, investors, especially those nearing retirement, are now more focused on income-producing investments."
   The new index will use MDL as a ticker symbol. It will be benchmarked against the Morningstar Dividend Composite Index, another new index that contains all dividend-paying stocks in the Morningstar US MarketSM Index that meet the dividend consistency and sustainability screens. The Dividend Leaders Index consists of the 100 highest yielding stocks in the Dividend Composite Index, according to Morningstar.
   "Our index is unique because we weight stocks in proportion to the dividends available to investors," said Sanjay Arya, director of Morningstar Indexes. "Both the amount of the dividend paid by a company and the size of the company are given due importance. Using available dividends helps avoid the investment capacity problems some other indexes face."