Dow Jones Indexes, an index provider, and STOXX Ltd., the provider of European equity indexes, makes changes in the treatment of dividend payments in the calculation of the Dow Jones and Dow Jones STOXX Indexes. The methodology enhancement affects all Dow Jones and Dow Jones STOXX price return indexes, while the total return version of the index series remains unchanged.
The new rule, which is effective with the start of trading on Monday, December 22, 2008, considers the company’s regular dividend payment policy and declaration to determine whether cash dividends are included in the price indexes. Under the new rule, only extraordinary or special cash dividends are included in the indexes. Previously, cash dividends with a gross amount equal to or greater than 10% of the stocks’ closing price on the day before the effective date were included in the price index calculation in their entirety. Special dividends from non-operating income continue to be included in the index calculation.
No other methodological modifications are being made to the index families. The total return versions of all Dow Jones and Dow Jones STOXX Indexes continue to include all types of dividend payments.
Today’s enhancement of the index methodology is a result of recently increased equity price volatility and reflects Dow Jones Indexes’ and STOXX Limited’s commitment to the constant development of its index family. In case a company could seek to maintain its dividend payment policy despite declining stock prices, the new dividend policy ensures that market performance of the Dow Jones and Dow Jones STOXX price indexes is reflected accurately.
D.C.