DGRW focuses on potential for dividend growth as opposed to backward-looking dividend increases. With the goal of increasing coverage of firms likely to be larger players in the dividend market, it mixes forward-looking earnings estimates with historical return on assets (ROA) and return on equity (ROE) growth in its selection process. The top 300 names based on the combined ranking of these three factors are selected for inclusion. The resulting portfolio tends to skew toward larger firms. Stocks projected to pay more dividends are weighted more heavily, with individual weights capped at 5% and sector weights at 20%. The index is rebalanced and reconstituted on an annual basis.
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