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No. of Recommendations: 8
Seems as though the 15% rate for taxing
dividends has spawn a new index and ETF.

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?guid=%7B0E62F203%2D9611%2D45E1%2DB237%2D07BE1FDBF7B3%7D&siteid=mktw

Article:
Dow Jones to launch dividend Index (DJ) By Greg Morcroft
NEW YORK (CBS.MW) -- Dow Jones Indexes, a unit of Dow Jones (DJ) , said Thursday it's launching the Dow Jones Select Dividend Index, which will include 50 stocks derived from the Dow Jones U.S. Total Market Index. To be eligible for inclusion in the index, a stock must have a positive historical five-year dividend per share growth rate, an average five-year dividend payout percentage rate less than or equal to 60 percent and an annual average daily dollar trading volume greater than $1.5 million. Those stocks will then be screened for dividend yield, and the top 50 yielding stocks will makeup the new index. "With new lower U.S. tax rates on dividends, more investors are becoming interested in companies issuing dividends. The Dow Jones Select Dividend Index allows investors to track these companies and to participate in the return on income of the highest-yielding stocks in the U.S.," Dow said in a press release. The company said it expects to license the first exchange traded funds based on the index by year-end.

-- MrMax --
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No. of Recommendations: 1
Sounds interesting. It should at least be a good screen. By looking at the stocks that make the cut one should be able to get some ideas about about individual stocks that they may wish to invest in.

Jim Sullivan aka 8128
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No. of Recommendations: 0
Sounds interesting. It should at least be a good screen. By looking at the stocks that make the cut one should be able to get some ideas about about individual stocks that they may wish to invest in.

Maybe even treat like the "Dow Dogs". Except keep-em.

TB
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No. of Recommendations: 2
This is now trading. Started on 11/7. Symbol DVY

Excerpts from news release

11/07/03


First Dividend Exchange Traded Fund Launched by iShares on the New York Stock Exchange


Barclays Global Investors (BGI) and the New York Stock Exchange (NYSE) announce that the iShares Dow Jones Select Dividend Index Fund (ticker: DVY) will begin trading on the NYSE today. The fund is the only exchange traded fund (ETF) investing solely in dividend-yielding stocks. The Dow Jones Select Dividend Index has a correlation of almost 70% to the Dow Jones Total Market Index¹.... The new iShares will be managed by Barclays Global Fund Advisors, a subsidiary of Barclays Global Investors, N.A, and has an expense ratio of 0.40%.

The Dow Jones Select Dividend Index invests in 50 of the highest dividend-yielding companies in the Dow Jones U.S. Total Market Index (excluding REITS) that have a proven track record for consistent dividend payout, based on the following criteria: they must have a positive historical five-year dividend-per-share growth rate, a five-year average dividend payout percentage rate less than or equal to 60%, and annual average daily dollar trading volume greater than $1.5 million. The index is rebalanced once a year and a company's weight is based on its indicated annual dividend.

iShares are index funds that are bought and sold like common stocks on national securities exchanges as well as certain foreign exchanges.

For a list of currently available iShares, visit www.ishares.com.

The foregoing site has a list of the top ten holdings and percentage in the various sectors. Click on Fund Information

TOP HOLDINGS* (Daily)
1 Altria Group Inc 4.31%
2 Honeywell International Inc 3.97%
3 PNC Financial Services Group 3.42%
4 FPL Group Inc 3.40%
5 General Motors Corp Class A 3.16%
6 Comerica Inc 3.11%
7 Sears Roebuck & Co 3.02%
8 Cooper Industries Ltd Class A 2.82%
9 PPG Industries Inc 2.76%
10 Pinnacle West Capital Corp 2.63%
As of 11/18/2003

TOP SECTORS/INDUSTRIES
1 Banks 32.83%
2 Electric Utilities 15.47%
3 Chemicals 10.88%
4 Tobacco 6.54%
5 Industrial, Diversified 4.87%
6 Energy 3.52%
7 Automobile Manufacturers 3.16%
8 Retail 3.02%
9 Electric Components & Equipment 2.82%
10 Gas Utilities 2.42%

*Holdings are subject to change.
Daily Holdings (HTML)



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No. of Recommendations: 1
Here is the complete list of holdings of DVY 
with the largest postion listed first. 
The columns are 
Symbol
Last Trade
Analysts estimate of price in one year 
Current yield                

                1 Yr
                Target
Sym	Last	Est	Yield	
MO 	50.00	54.50	5.44	
HON 	29.12	30.69	2.58	
PNC 	53.30	52.33	3.75	
FPL 	63.44	68.61	3.78	
GM 	42.21	40.67	4.74	
CMA 	51.10	47.67	3.91	
S	54.00	48.80	1.70	
CBE 	52.42	56.25	2.67	
PPG 	57.26	60.50	3.07	
PNW 	37.76	37.21	4.77	
PBCT 	32.16	29.00	4.85	
GAS 	32.64	30.60	5.70	
DOW 	36.81	39.50	3.64	
DTE 	36.68	37.67	5.62	
EMN 	34.47	35.43	5.11	
UVV 	41.51	50.00	3.47	
LNC 	37.59	40.13	3.72	
FE 	33.29	36.80	4.51	
ASBC 	41.72	40.63	3.26	
NCC 	32.58	35.18	3.93	
WTNY 	38.53	38.17	3.43	
CBCF 	30.48	26.75	3.74	
BKH 	31.49	32.50	3.81	
KEY 	27.95	27.63	4.36	
HU 	36.22	36.67	3.31	
OXY 	36.02	39.78	2.89	
DNY 	27.60	29.00	3.77	
BMY 	26.66	28.12	4.20	
FMER 	26.82	24.23	3.88	
MRO 	29.18	29.89	3.43	
GR	26.72	25.71	2.99	
NI 	20.24	21.40	4.55	
GPC 	30.94	35.00	3.81	
WFSL 	27.82	25.00	3.16	
ASO 	23.68	23.50	4.05	
SBC 	23.02	24.50	4.91	
DQE 	16.53	13.50	6.05	
PFGI 	30.18	31.06	3.18	
LZ 	30.03	37.50	3.46	
MWV 	25.25	28.39	3.64	
SKYF 	24.52	25.06	3.26	
LYO 	14.77	15.56	6.09	
PBKS 	29.49	31.67	3.26	
SVU 	24.60	25.39	2.36	
RCL 	28.01	31.93	1.86	
CNB 	16.42	14.01	3.41	
HBAN 	21.44	21.50	3.26	
HIB 	22.95	24.25	3.14	
ASN 	27.35	25.21	6.25	
RPM 	14.80	18.13	3.78	
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No. of Recommendations: 0
It is interesting to analyse the previous post and compare the 
current price of each stock with the analyst's estimated price 
of the stock in one year.

I just looked at the differences, and if I counted right, 

17 of the 50 are expected to lose market value in the next 12 months,

12 will total-return just a little more than the yield,

6 are 1 star (total return of high single digit or a little more,

12 are 2 star (total return in the teens)

3 are 3 star (total return in the twenties)

Note: my own star system (not copywrited)

This superficial analysis does not make me extremely anxious to buy DVY.

I wonder if there has been a study of how analyst projections 
compare with the actual price increase or decrease of stocks.  
Is the target number of any value at all to a prospective investor?

Any opinions?
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No. of Recommendations: 0
REITster

As an income investor, measures of total return don't interest me...the continuity and reliability of the dividend do...as well as projected dividend growth.

So that 17 of the 50 stocks in this new ETF are projected to lose value only has relevance if their dividend coverage ratios will be maintained. Now, the original Barclay critera for stock membership in the ETF would suggest this is so, based on historic data....but did the 'analyst' suggest why these prices are expected to decline? Earnings fundamentals or other reasons?

Also as an income investor, I have found it is usually a waste of time to wait for a company's stock to decline (due to other than fundamental reasons) to pick up a better yield....the opportunity costs in dividends foregone usually exceeds the increase yield in the event the stock price actually does decline.

BruceCM
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Is there any thought about adding the top 10 or 15 REITs to the index as a way to up returns. Or conversly, any thought about a REIT Index for income investors?
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No. of Recommendations: 1
This new ETF from iShares specifically excludes REIT's from its portfolio. If you want a REIT index check out Vanguard Funds. They have one.
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No. of Recommendations: 3
REIT indexes are available in 3 flavors: INDEX Mutual Funds, REIT ETFs and REIT Closed end Funds.

REIT Closed-End Funds Trade on the exchange like a stock. They will trade at a premium or discount to NAV (for REIT CE fund, NAV = weighted avg of REIT share prices). Be mindful of dividend history: The incentives with the fund manager are potentially at conflict with the income investor. Also, be mindful of leverage, which is common in CE funds. Low short-term rates will provide 'juiced-up' fund yields…but yield will plummet if short term rates rise while the fund manager's fees usually remain steady
Examples: JRS, NRL, RFI, RIF, RLF, RPF, RQI, RRE, SRQ

REIT Exchange Traded Funds (ETF's)
Typically unmanaged index funds with low expense ratios
Should not trade at premium/discount
Relatively recent, so no significant dividend history
Examples: ICF, IYR, RWR

REIT Index MF's per M* (Premium Service) are

ProFunds Ultra Real Estate Inv REPIX
ProFunds Ultra Real Estate Svc REPSX
Vanguard REIT Index VGSIX
Vanguard Reit Index Adm VGSLX
Wells S&P REIT Index A WSPAX
Wells S&P REIT Index B WSPBX
Wells S&P REIT Index C WSPCX

All, except Vanguard, carry some form of load and relatively high expense ratios.

BruceCM
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