Index Tracker Funds

kmb275l

Hi All,
I would be grateful if someone could clarify whether FTSE 100 index funds attract dividends? If so,are dividends paid no matter whether the FTSE goes up or down?
Please forgive the question if it seems somewhat naive,I'm just about to dip my toe into this type of investment for the first time.
Thanks very much.

Linton

kmb275l wrote: »

Hi All,
I would be grateful if someone could clarify whether FTSE 100 index funds attract dividends? If so,are dividends paid no matter whether the FTSE goes up or down?
Please forgive the question if it seems somewhat naive,I'm just about to dip my toe into this type of investment for the first time.
Thanks very much.

Yes to both questions. You can buy "INC" funds where the dividend is paid as cash and "ACC" funds where it is reinvested within the fund.

kmb275l

Thanks Linton,much obliged to you.:)

quotememiserable

The ftse100 yields around 3% so its not to be ignored. The return from both capital and dividend is shown combined by the total return index. Google it you'll find some charts and stuff.

mania112

quotememiserable wrote: »

The ftse100 yields around 3% so its not to be ignored.

Is that good?

JohnRo

mania112 wrote: »

Is that good?

It is if you're also sitting on a substantial capital growth as well. That said I'd personally be wary of a big lump sum investment in the current climate.

jimjames

mania112 wrote: »

Is that good?

How much do you get from a cash ISA or instant access account? Compare that and I think you'll have an answer.

There have not been many occasions when shares yield more than savings accounts. Normally you get a lower yield on shares because you expect it to rise in future and match/beat inflation.

grey_gym_sock

the dividend is giving you more than half of the average real return from shares.

e.g. if the average real return is 5%, that could come from capital gains of inflation + 2%, and dividends of 3%.

DCF_Evaluator

In relation to the above, the level of the FTSE100 index is published daily and intra-daily via the FT, Yahoo Finance etc is (as above). Is this capital return only ie it excludes the effect of dividends paid to investors? So, say, if HSBC goes xd today and the market (mid?) price drops as a result from (say) £7.00 to £6.50 and (say) HSBC was the only stock in the FTSE100 that index - assuming no other market price changes today - would show a decline for today?

There is as I understand it a lesser-known Total Return index (also mentioned above). I take this would include the effect of dividends? So in the example above, the price beginning and end of day for HSBC and the FTSE would shown no change?

Financial Services companies often quote market index movements as part of their litertature. These vary. There are issue of:

- whether a capital or a total return index has been used
- the source of the information.

Does anyone know if any 'official' index source available to the general public exist especially of the FTSE Total Return Index(es)? This might be similar to the way that the GAD makes official annuity rates available?

Any information gratefully received.

sabretoothtigger

The FT itself will track a share over time and show both growth and the income from dividends. Add the two together and you have total return. See market data graphs

An index where the dividends are never taken out is not commonly discussed. The ACC prices are with regular buys, near enough

coastline

A few links on total returns...

https://forums.moneysavingexpert.com/discussion/3960607

http://www.ftse.co.uk/Indices/UK_Indices/Downloads/FTSE_All-Share_Index_Factsheet.pdf

http://www.killik.com/importance-of-dividends/


In general when a company pays out the dividend the price of the share will fall to reflect the payment.In some cases it falls more than the cash payout and in other cases a bit less.Very rarely do you see a rise in share price on payout day.The end of day price of the share is then used to calculate the index move for that particular day.