Dow Jones launches Islamic Market Global Select Dividend index

By Toni Weeks

San Diego, Sept. 13 - Dow Jones Indexes has launched the Dow Jones Islamic Market Global Select Dividend index, expanding its Dow Jones Islamic Market index series, according to a press release.

The Shari'ah-compliant index will be used as a gauge to measure the stock performance of 100 of the highest dividend-yielding stocks from the Dow Jones Islamic Market World index and will serve as a benchmark and underlying instrument for investment products such as mutual funds and exchange-traded funds.

"The Dow Jones Islamic Market Global Select Dividend index is a unique barometer that addresses two market trends: increasing interest in dividend-paying companies and the growth of Shari'ah-compliant investments," president Michael A. Petronella said in the release.

To be eligible for inclusion in the index, companies must pay a current dividend, have a minimum three-month average daily trading volume of $3 million, have a previous-year dividend-per-share ratio that is greater than or equal to the company's five-year average annual dividend-per-share ratio and have a five-year average payout ratio of less than or equal to 60% for U.S. and European companies or less than or equal to 80% for all other countries.

The index excludes companies that are involved in lines of business associated with alcohol, pork-related products, conventional financial services, defense/weapons and entertainment. Companies must also pass financial ratio screens; their total debt, cash plus interest-bearing securities and accounts receivables divided by trailing 14-month average market capitalization must each be less than 33%.

The index, which has been licensed to IPM Informed Portfolio Management, a European systematic investment manager, is reviewed annually in December. The index is calculated in price return and total return, and component weightings are assigned based on dividend yield, subject to caps that limit weightings.

New York-based Dow Jones Indexes develops, maintains and licenses indexes for use as benchmarks as the basis of investment products.

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