Specifically, the underlying index screens for equity securities with an above-average forecasted dividend yield and further scores components based on three fundamental value characteristics, including price to trailing 12-month diluted earnings from continuing operations ratio, price to trailing 12-month free cash flow and price to trailing 12-month sales ratio. The 50 companies with the largest dividend indicated yield are chosen as underlying holdings and are weighted by dividend yield.

Top holdings include Valero Energy Corp 5.5%, Kohls Corp 5.4%, General Mtrs 5.1%, AT&T 5.1% and Seagate Technology 5.1%.

“The last two years have seen factor investing gaining much traction in the indexing space with a growing number of investment products tracking factor-based indices,” Henning Kahre, Head of Research Solactive AG, said in a note. “The Solactive Power Factor™ High Dividend Index combines quality and valuation criteria. By using a multi-step selection process that accounts for differences at the sector level, the index methodology results in an index that is pretty robust in providing the targeted exposure.”

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