Index provider S&P Dow Jones Indices has launched the S&P Dividend Growers Index Series, which includes the S&P US Dividend Growers Index and the S&P Global Ex-US Dividend Growers Index, adding to its family of widely-tracked dividend-based benchmarks.

The two indices have been selected by and licensed to Vanguard to serve as target benchmarks for two of the asset manager’s dividend-focused index funds. The US index will also be used as a performance benchmark for one of the asset manager’s actively managed mutual funds.

The S&P Dividend Growers Index Series is anchored on rules-based and publicly available methodologies. The S&P US Dividend Growers Index and the S&P Global Ex-US Dividend Growers Index utilize the S&P United States BMI and the S&P Global Ex-US BMI as the starting universe for stock selection.

The two indices measure the performance of companies that have followed a policy of consistently increasing dividends every year for a specified number of years. The indices are subject to an indicated annual dividend yield exclusion, omitting the top 25% highest-ranked eligible companies from the index universe.  To reduce excessive turnover, existing constituents are removed from the index if they are in the top 15% by dividend yield.

Constituents are float-adjusted market capitalization (FMC) weighted, subject to a single constituent weight cap of 4%. The index series attempts to ensure high capacity and tradability by rebalancing over a period of three days compared to the standard single-day rebalance in most equity indices.

“We’re very pleased that Vanguard has selected our indices to serve as target benchmarks for two of their popular dividend-themed index funds and the performance benchmark for an actively managed mutual fund. S&P DJI is pleased to license our indices to clients such as Vanguard so that they in turn can offer accessible and cost-efficient products to help end investors save for retirement and meet their investment goals,” says S&P DJI chief executive officer Dan Draper.