What does the dividend index mean? Many new investors do not know what dividend index is and how to buy dividend index funds. Now let's introduce what dividend index means and what dividend index funds are. I hope it can help you.
The dividend index is a special index newly developed in the last decade, which is specialized in investing in high dividend paying enterprises. So what is dividend? How can we make a profit from buying and selling stocks? There are two ways for us to make profits from buying and selling stocks: 1. capital gains; 2. Dividends.
Capital gains are gained through the fluctuation of price or net value, buying stocks at a low price and selling them at a high price. This is also a very familiar way for ordinary investors to make profits.
Dividend profit means that after the company makes a profit from its operation, it gives part of its capital to shareholders. This is the dividend. If we keep holding and don't sell, we can reap dividend income every year.
Dividend index funds basically have cash dividends every year. If we hold dividend index funds, we can get dividends from dividend index funds every year.
The dividend index gains high returns by holding dozens of stocks with the highest cash dividends. Dividends can also be called stock dividends. Companies with good performance will give a part of their net profits back to shareholders in the form of cash dividends every year. Some studies have shown that stocks that can achieve high cash dividends have higher average returns on long-term holdings than stocks with low cash dividends.
Dividend index is a general term, which includes several indexes.
1. Shanghai Stock Exchange dividend index
The Shanghai Stock Exchange dividend index selects the 50 companies with the highest cash dividends from the Shanghai Stock Exchange. At present, the only fund tracking the Shanghai Stock Exchange dividend index is the exchange fund dividend ETF.
2. CSI dividend index
The CSI dividend index selects 100 companies with the highest cash dividends from the Shanghai Stock Exchange and Shenzhen Stock Exchange. The only fund tracking the CSI dividend index is the OTC fund Wells Fargo CSI dividend. The CSI dividend index is dominated by large cap stocks.
3. Bonus opportunity index
The bonus opportunity index is similar to the dividend of China Securities Market. It also selects 100 high dividend stocks, but it has requirements for stock profitability. In addition, the bonus opportunity index also limits the proportion of each industry. The dividend opportunity index is mainly small and medium-sized. The fund tracking dividend opportunity index is special. This index fund can be bought both on and off the market. Its name is Warburg S&P China A-share dividend opportunity (LOF).
What is LOF fund?
LOF funds can not only be traded on the OTC market, but also be traded on the OTC market through subscription and redemption. In short, LOF fund means that the codes inside and outside the market are consistent, and can be traded both inside and outside the market.
Bonus funds are also good long-term pension products. Generally, there are advanced dividends every year to generate cash flow. Cash flow can provide us with an additional income to improve the life of the elderly.
The dividend index has another characteristic: the longer the dividend index is, the higher the dividend will be. Dividends come from the company's profits. As the company continues to develop, profits rise for a long time, so does dividends.
