To gain insight into how dividend-oriented US small cap stocks have performed year-to-date and over the longer term, global index provider FTSE Russell examined the performance of the Russell 2000® Dividend Growth Index relative to the market cap-weighted Russell 2000 Index.
The Russell 2000 Dividend Growth Index has risen 5.4% year-to-date as of March 9th relative to a 5.3% decrease for the US small-cap Russell 2000 Index for the same time period. And over the one, three and five-year periods, the Russell 2000 Dividend Growth Index also rose more and fell less than its parent index.
Russell Index Performance
Source: FTSE Russell. Data as at March 9, 2016. Past performance is no guarantee of future results. Returns shown may reflect hypothetical historical performance. Please see the end for important legal disclosures.
Tom Goodwin, Senior Index Research Director, FTSE Russell:
“We’ve seen growing interest by market participants in indexes that can represent the performance of market factors which have been shown to impact company performance. Being able to identify and aggregate stocks with demonstrated ability to pay consistent dividends over time has yielded very interesting results.”
Simeon Hyman, Head of Investment Strategy, ProShares
“Companies that consistently increase dividends over time are generally high-quality companies demonstrating strong performance. Only a small number of companies in the Russell 2000 Index have been able to consistently increase their dividends for 10 years or more—they make up the Russell 2000 Dividend Growth Index.”
The ProShares Russell 2000 Dividend Growers ETF, launched by ProShares in 2015, is based on the Russell 2000 Dividend Growth Index.
The Russell Dividend Growth Indexes are designed to represent those companies that have succeeded in increasing their dividend payments over a period of ten or more years. These stocks are expected to deliver better than market average dividend yields. Index constituents are screened for liquidity and for dividend status, then selected and equal weighted subject to a maximum sector weight of 30%. To maintain appropriate weightings, index constituents are rebalanced to equal weight on a quarterly basis.
More FTSE Russell Index IDEAs and other insights and analysis from FTSE Russell index experts can be found on the new FTSE Russell blog.
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Views expressed by Tom Goodwin of FTSE Russell and Simeon Hyman of ProShares are as of March 16th and subject to change. These views do not necessarily reflect the opinion of FTSE Russell or the London Stock Exchange Group.
No member of the LSE Group nor their respective directors, officers, employees, partners or licensors make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the Russell 2000® Dividend Growth Index or Russell 2000® Index or the fitness or suitability of the indexes for any particular purpose to which they might be put.
No member of the LSE Group nor their respective directors, officers, employees, partners or licensors provide investment advice and nothing in this IDEA should be taken as constituting financial or investment advice. No member of the LSE Group nor their respective directors, officers, employees, partners or licensors make any representation regarding the advisability of investing in any asset. A decision to invest in any such asset should not be made in reliance on any information herein. Indexes cannot be invested in directly. Inclusion of an asset in an index is not a recommendation to buy, sell or hold that asset. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.
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Past performance is no guarantee of future results. Charts and graphs are provided for illustrative purposes only. Index returns shown may not represent the results of the actual trading of investable assets. Certain returns shown may reflect back-tested performance. All performance presented prior to the index inception date is back-tested performance. Back-tested performance is not actual performance, but is hypothetical. The back-test calculations are based on the same methodology that was in effect when the index was officially launched. However, back- tested data may reflect the application of the index methodology with the benefit of hindsight, and the historic calculations of an index may change from month to month based on revisions to the underlying economic data used in the calculation of the index.