STOXX Ltd., the leading European index provider, announced that it will launch the first pan-European select dividend indexes. The indexes, the Dow Jones STOXX Select Dividend Index – covering Europe – and the Dow
Jones EURO STOXX Select Dividend Index – covering the Eurozone – track high-dividend- paying stocks. The launch of the new indexes is scheduled for the end of the first quarter of 2005.
These new indexes are based on the concept of the Dow Jones US Select Dividend Index, which was launched in November 2003 to respond to the increased interest of U.S. investors in companies issuing dividends after lower U.S. tax rates on dividends were introduced.
“The index business in Europe is entering a new phase characterized by broader diversification. The Dow Jones STOXX Select Dividend Index and the Dow Jones EURO STOXX Select Dividend Index offer investors the ideal tools to track high-dividend- yielding companies across Europe and the Eurozone,” said Lars Hamich, managing director, STOXX Ltd.
“We expect to license these indexes to financial institutions, allowing investors to participate in this concentrated dividend strategy. This
dividend index concept has proven very successful in the U.S. and we expect these indexes to be well received in Europe.”
Assets tied to financial instruments based on the Dow Jones US Select Dividend Index exceeded $6 bln as of Jan. 31, 2005.
Simona Deckers, a Stoxx spokesperson told the Financial Mirror that companies from Cyprus are not likely to be included, since Cyprus, like the other new EU countries, is not calculated in the DJ STOXX 600 index, the underlying index for the DJ STOXX Select Dividend Index.
Greece will definitely be among the eligible countries for the DJ Euro Stoxx Select Dividend Index. The underlying index from which companies qualify is the DJ Euro STOXX.
“But we have to wait until the final lists will be published. We do not know which company will be included,” said Deckers.
“One word about the methodology: generally, we look for the companies with the highest dividend yield. The indexes will be based on dividend yield and will also be weighted by dividend yield and not by market cap. If a Greek company has a very high dividend yield compared to all the other European companies in the Eurozone, it could be possible.”
