New Global Select Dividend Index Fund Screens Candidates Strictly
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Investors looking for incomes from diversified international equities have one more option to from which to choose.
Early last week, First Trust launched a new global dividend ETF, the Dow Jones Global Select Dividend Index Fund (FGD), joining other international dividend-paying ETFs. The fund started trading on November 27th under ticker symbol FGD. The underlying index of FGD is the Dow Jones Global Select Dividend Index [PDF], which is defined by component companies of the 24 developed-market country indexes in the Dow Jones Global Indexes [DJGI] family.
The index applies strict dividend standards to companies hoping to join. Particularly, to be eligible for inclusion, according to the index’s screening procedure, a company must:
- Pay a current dividend.
- Have a current-year dividend-per-share ratio that is greater than or equal to its five-year average annual dividend-per-share ratio.
- 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.
- Have a minimum three-month daily average trading volume of $3 million.
Currently, FGD holds top 100 dividend-paying stocks, all members of the Dow Jones Global Select Dividend Index [DJGSDT]. Companies in the index are weighted by their annual dividend yields, with an upper limit of 10% to prevent the index from being dominated by a single high-yield stock. The fund’s country breakdown is as following:
- Australia: 28.41%
- Great Britain: 22.14%
- United States: 20.08%
- Canada: 8.01%
- Singapore: 5.27%
- Hong Kong: 4.03%
- Italy: 3.39%
- Netherlands: 2.11%
- New Zealand: 1.89%
- Finland: 1.37%
- France: 1.18%
- Other: 2.12%
FGD has an expense ratio of 0.60% and dividend yield 4.95%, which is quite high compared to other dividend ETFs. Dividends are distributed on a quarterly basis and the index is rebalanced once a year in December.
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