BlackRock has launched the iShares High Dividend Equity Fund on the NYSE Arca. The new fund provides exposure to high quality income-producing US securities.
iShares offers a broad and modular suite of income-focused ETFs, allowing investors to implement dividend investing strategies using diversified and cost-effective vehicles. iShares launched the first US-listed dividend ETF (NYSE Arca: DVY) in 2003.
"Income is in high demand, yet continues to be hard to come by from traditional sources in a cost-effective, diversified, flexible trading manner," says Noel Archard (pictured), Head of US Product at iShares at Blackrock. "A basket of high dividend yielding equities can often provide investors with several benefits such as the potential for enhanced total return (especially in uncertain market environments), possible reduced volatility as compared to more growth-oriented stocks, and greater inflation protection than bonds through the ability to provide capital appreciation."
The fund is benchmarked to the Morningstar Dividend Yield Focus Index, which provides access to US equity securities issued by companies that have provided relatively high dividend yields on a consistent basis. Morningstar’s proprietary index methodology screens US companies for superior company quality and financial health based on the Morningstar’s Economic Moat rating system and the Morningstar Distance to Default measure. Economic moat describes the sustainability of a company’s future economic profits, and distance to default measures the likelihood that a company may encounter financial distress. The index provides access to the top 75 companies by dividend yield that meet the eligibility criteria. The top three sectors in the index as of 2/28/11 are Consumer Goods (19.8%), Healthcare (19.1%) and Utilities (17.1%).