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moneysense.ca, 3/05/05
S&P Dividend Aristocrats Index
One of the disadvantages of index funds is that the dividend yields on most stock market indices is very low. An investor in index funds has to rely almost entirely on capital gains for their returns. I noted that this was a drawback of my sleepy portfolio.
Noticing the demand for dividend income, S&P has launched a new dividend aristocrats index, which is composed of stocks in the S&P 500 index that have a history of increasing dividends. Currently, there are 57 names in the index.
Any index fund or ETF based on the S&P Dividend Aristocrats Index will be a strong competitor to the existing (and very popular) iShares Dow Jones Select Dividend Index Fund (DVY), which yields about 3.06%.
Recent BusinessWeek stories on Dividend Aristocrats:
moneysense.ca, 3/05/05
How does an Index Dividend fund growth then? I have index funds, but are the dividends added to the funds TOTAL or are you paid dividends for holding the index “shares”?
c8j
The fund would pay out cash dividends collected from the underlying securities. The only ETFs that don’t pay cash dividends that I know of are the “clone” funds like two of the iUnits funds (i500R and iIntR).