Global index provider FTSE Group has Tuesday launched a new index series that focuses on the sustainability of corporate dividends.
The new FTSE Global Sustainable Yield Index Series is designed to measure the performance of equity securities exhibiting “relatively high and sustainable” yields. The new index series will initially consist of 11 individual benchmarks capturing a range of different markets and regions.
The firm says that the new series has been developed as a result of market demand for indices that focus on yield and also factor in the likelihood that a dividend will be paid.
“The new benchmarks exclude extreme yielding stocks and assess the financial and operating strength of the underlying business. A specific focus is given to companies identified as having strong balance sheets and the ability to generate positive cash flow,” it says. It also uses other screening criteria, including the payout ratio, and the incidence of historic and forecast dividend cuts.
“The FTSE Global Sustainable Yield Index Series represents the evolution of income focused benchmarks,” said Peter Gunthorp, managing director, research & analytics at the FTSE. “In the current interest rate environment, the indices will be of particular note to market participants focused on the performance of companies exhibiting high and sustainable yields.”