FTSE High Dividend Yield Index Explained

The FTSE High Dividend Yield Index is a benchmark that tracks the performance of high dividend-yielding stocks in the UK market. It's designed to help investors identify stocks with attractive dividend payments.

The index is constructed using a rules-based methodology, which ensures that only stocks with a high dividend yield are included. This means that the index is a useful tool for income-seeking investors.

The index is rebalanced quarterly, which helps to maintain its integrity and ensure that it continues to reflect the market's true performance. This rebalancing process also helps to minimize the impact of any individual stock's performance on the overall index.

The FTSE High Dividend Yield Index has a relatively small number of constituents, with around 50 stocks making up the index. This concentration of stocks can make the index more volatile than some other benchmarks.

The FTSE High Dividend Yield Index offers investors a reliable way to access a portfolio of high-yielding stocks.

Historic dividend yields for this index have been consistently above 3% over the past few years, with a high of 3.67% in 2022.

One notable example is the dividend yield in 2023, which stood at 3.54%. This is a significant return for investors, especially considering the current interest rate environment.

The dividend yield has remained relatively stable, with a slight increase from 3.40% in 2024 to 3.41% in the same year.

Here's a brief overview of the dividend yield for the past few years:

The dividend yield for this index is not the only consideration for investors. The payment frequency and ex-dividend date are also crucial factors to consider.

Let's take a look at the top 10 holdings in a particular portfolio. JPMorgan Chase & Co. holds a significant 2.04% stake, while Exxon Mobil Corp. follows closely with 1.68%. Procter & Gamble Co. and Home Depot are tied at 1.25%, both holding substantial positions.

Procter & Gamble Co. and Home Depot's equal weighting suggests a balanced approach to investing. Johnson & Johnson is just behind, holding 1.24% of the portfolio.

The remaining holdings show a more modest presence, with Bank of America Corp. holding 0.91% and Merck & Co., Inc. at 0.83%. Chevron Corp. and The Coca-Cola Co. round out the top 10 with 0.82% and 0.81% respectively.

Here are the top 10 holdings in a concise list:

The current dividend yield is a crucial metric for investors to consider when evaluating a stock's potential for generating income. It's a percentage that represents the ratio of the annual dividend payment to the stock's current price.

According to Digital Look, the current dividend yield for the stock is 3.01%. This is a relatively attractive yield, especially compared to other investments.

The dividend yield can fluctuate over time, and it's essential to check the most up-to-date information before making any investment decisions.

The Net Income Ratio is a key metric to understand when it comes to dividend investing. It's a percentage that represents a company's net income as a percentage of its total assets.

For VHYAX, the Net Income Ratio is 2.97%. This is relatively low compared to the category high of 4.28%. In fact, it's lower than the category low of -1.51%.

To put this into perspective, a higher Net Income Ratio generally indicates that a company is generating more income from its assets, which can be a good sign for dividend investors.

FTSE's Benchmark Methodology is designed to ensure that their indexes accurately reflect the target markets. FTSE uses transparent rules to determine inclusion in their indexes.

FTSE's indexes cover a significant portion of the world's investable market capitalization, with the FTSE Global Equity Index Series covering over 17,000 securities in 49 countries. This comprehensive range of indexes is managed on both standard and custom bases.

Stocks are screened for liquidity and adjusted for free float to ensure that benchmarks reflect the shares available in the open market. This ensures that the indexes accurately represent the target markets.

The FTSE Global Equity Index Series captures 99% of the world's investable market capitalization, making it a reliable benchmark for investors.

Fees and costs are an important consideration when investing in the FTSE High Dividend Yield Index.

The ongoing charge, also known as the OCF or TER, is 0.29%. This is a recurring fee that you'll pay each year.

Management fees are also 0.29%, which is the same as the ongoing charge. This fee will be deducted from your investment.

The indicative spread is 0.35%, which is the difference between the buying and selling prices of the investment.

Here's a breakdown of the fees and costs:

Please note that additional costs may apply in certain cases, so be sure to read the relevant documentation before investing.

Let's break down the costs associated with investing.

The ongoing charge, also known as OCF or TER, is 0.29%. This is a significant cost to consider when making investment decisions.

In addition to the ongoing charge, you'll also be charged a management fee of 0.29%. This fee is likely to be deducted from your investment regularly.

The indicative spread is another cost to be aware of, coming in at 0.35%. This cost is likely to be factored into the overall cost of your investment.

Here's a summary of the costs mentioned:

It's essential to read the Key Investor Information Document, Factsheet, Prospectus, and any other relevant documentation before investing to ensure you're aware of any additional costs that may apply.

Sales fees can eat into your investment returns, so it's essential to understand what you're paying. VHYAX charges a fee of 1.00% for front load and 0.95% for deferred load.

The front load fee is a flat rate of 1.00%, while the deferred load fee is a lower rate of 0.95%. These fees are applied to the total assets under management (AUM).

Here's a breakdown of the sales fees for VHYAX:

Keep in mind that these fees are subject to change, and it's always a good idea to review the fund's prospectus for the most up-to-date information.

The FTSE High Dividend Yield Index offers a range of distribution options that can help investors meet their income needs.

The index's total return has been relatively stable, with a 0.1% YTD return.

Over the past three years, the index has delivered an annualized total return of 7.0%, which is a notable performance.

In the past five years, the index has seen a significant increase in total return, with an annualized return of 9.8%.

The index does not have a capital gain distribution frequency, which means investors won't receive regular distributions from capital gains.

A notable aspect of the index is its net income ratio, which is 2.97%. This means that a significant portion of the index's returns come from net income.

Investors can also look forward to quarterly dividend distributions, which provide a regular source of income.

Here are the key distribution metrics for the FTSE High Dividend Yield Index: