S&P Dow Jones Indices and the Toronto Stock Exchange have launched the S&P/TSX Composite Shareholder Yield Index and the S&P/TSX Composite Buyback Index.
The S&P/TSX Composite Shareholder Yield Index is designed to measure the performance of the top 50 stocks with the highest shareholder yield in the S&P/TSX Composite. Shareholder yield ratio is derived from the payment of dividends to common shareholders, the monetary amount companies spend in their common stock repurchase programs, and debt paydown (change in total debt) over the last four calendar quarters.
Horizons ETFs Management (Canada) Inc. has licensed the S&P/TSX Composite Shareholder Yield Index as the basis for a potential new exchange traded fund for the Canadian Market.
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The S&P/TSX Composite Buyback Index is designed to measure the performance of the 50 constituent companies in the S&P/TSX Composite with the highest buyback ratio in the last 12 months. The buyback ratio is defined as the amount of cash paid for common share buybacks in the last four calendar quarters divided by the total market capitalization of common shares at the beginning of the buyback period.
“Buybacks, like dividends, have become an increasingly significant part of corporate payouts, in Canada and in most developed markets,” says Vinit Srivastava, senior director of strategy indices at S&P Dow Jones Indices. “With the launch of these indices today, S&P Dow Jones Indices is meeting the growing demand of Canadian investors for factor-based, non-market cap weighted benchmarks.”