Index provider MSCI Inc is introducing the MSCI China A High Dividend Yield (HDY) Index, a new index including Chinese stocks with a track record of sustainable and consistent dividend payouts and dividend growth.
The new gauge has been designed to serve as a benchmark for investors targeting the high dividend-yielding opportunity set within the flagship MSCI China A Index or as the basis for financial products such as exchange-traded funds (ETFs) and structured products.
"Dividends produced from the stocks in the MSCI China A Index have grown significantly - from RMB12.95bn ($3.2bn) in 2005 to RMB94.7bn ($15.3bn) in 2012," said Theodore Niggli, MSCI's head of the Asia Pacific index business. "Furthermore, we have seen close to a 110% increase in the number of dividend-paying companies in the MSCI China A Index since 2009."
The MSCI China A HDY Index includes only securities that offer a higher than average dividend yield (i.e. at least 30% higher) relative to that of the parent index, the MSCI China A Index, and that pass dividend sustainability and persistence screens.
In addition, MSCI screens out stocks that do not meet certain "quality" characteristics in order to exclude stocks with potentially deteriorating fundamentals that could force them to cut or reduce dividends.
The MSCI China A HDY Index is calculated using free float-adjusted market capitalisation weights.