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While the market offers many dividend strategies, few incorporate dividend forecasts to provide a forward-looking assessment. The S&P 500^® High Dividend Growth Index utilizes the industry-leading S&P Global Dividend Forecasting dataset to select constituents from the S&P 500 that are projected to have the highest dividend yield growth. This innovative index applies a unique methodology, tracking companies based on a dividend growth score calculated by subtracting 12-month trailing yield from the 12-month forecasted yield.

Launched on Oct. 23, 2023, the S&P 500 High Dividend Growth Index has made a strong start, outperforming similar dividend indices. Furthermore, it has historically shown higher dividend yields and dividend growth rates than The 500™.

In this blog, we will examine the historical characteristics of this index, including its risk/return profile, dividend yield and dividend growth rate. We will also assess its dividend contributions over time and review its sector allocations throughout the years.

Performance since Launch

The S&P 500 High Dividend Growth Index has outperformed other leading dividend strategies both YTD and since its launch, posting returns of 5.75% and 30.51% over those periods, respectively. Exhibit 1 shows that in 2024, the index posted strong performance with a 16.26% return, outperforming most dividend strategies.

Similarly, the S&P 500 High Dividend Growth Index has exhibited solid performance in line with its benchmark, which is not an easy feat given the recent strong performance of mega-cap stocks.
 

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Long-Term, Back-Tested Performance

Since 2010, which includes back-tested performance, the S&P 500 High Dividend Growth Index has posted a robust annualized return of 13.54% and a risk-adjusted return of 0.75. The S&P 500 High Dividend Growth Index’s performance has closely aligned with The 500, a notable achievement given the dominance of growth-oriented stocks over the past decade (see Exhibit 2).

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Dividend Yield

As shown in Exhibit 3, the dividend yield of the S&P 500 High Dividend Growth Index consistently outpaced the dividend yield of The 500 from 2011 to 2025. On average, the S&P 500 High Dividend Growth Index’s dividend yield was 3.09%, outperforming The 500’s dividend yield (of 1.82%) by 1.27%.
 

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Dividend Growth Rate

From 2011 to 2025, the S&P 500 High Dividend Growth Index and The 500 grew their dividends at annual rates of 10.6% and 8.8%, respectively. More recently, from 2023 to 2025, the S&P 500 High Dividend Growth Index’s dividend growth rate was 8.7%, surpassing The 500’s 6.5% rate (see Exhibit 4).
 

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Dividend Contributions

As displayed in Exhibit 5, dividends contributed a greater percentage to the total return of the S&P 500 High Dividend Growth Index than to the total returns of the market-cap and equal-weight benchmarks, as well as style indices like value and growth. Notably, the dividend contributions of the S&P 500 High Dividend Growth Index were 9.8 percentage points higher than those of The 500.
 

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Sector Weights

Exhibit 6 shows how the sector weights of the S&P 500 High Dividend Growth Index have changed over time. On average, the largest sector weights in the index have been Financials, Industrials, Utilities and Information Technology. For a dividend strategy, the weights across the sectors have been overall balanced.
 

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Conclusion

The S&P 500 High Dividend Growth Index combines forward-looking and historical metrics for constituent selection. Its innovative design has historically delivered higher dividend yields and growth rates than its benchmark, all while maintaining strong total returns. Although this index has only been live for just over 12 months, it is noteworthy that it has outperformed similar high dividend yield and dividend growth indices by posting strong returns over this period.

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