Introduction
Dividends play an important role in equity markets. They account for a crucial portion of equity total returns, which consist of capital gains from price changes and income from dividends, providing a complete and accurate measure of equity market performance. In the U.S. market, dividends and dividend reinvestment contributed more than one-third of the total return of the S&P 500® over the nearly 90-year period from March 31, 1936, to Dec. 31, 2025. At the same time, indices focusing on stocks with high dividend yields have historically outperformed their benchmarks.
As Exhibit 1 shows, the Indonesian dividend market has quadrupled over the past 10 years, with the dividend pool reaching a record high of IDR 331 trillion in 2024. Alongside the development of the dividend market, our back-tested research suggests that a simple strategy of targeting stocks with high dividend yields emerged as a strong performance generator historically. A pioneer in the development of dividend indices, S&P Dow Jones Indices (S&P DJI) has expanded its flagship S&P Dividend Opportunities Index Series into the Indonesian market. In collaboration with the Indonesia Stock Exchange (IDX), S&P DJI launched the S&P/IDX Indonesia Dividend Opportunities Index in 2025.
In this paper, we introduce the S&P/IDX Indonesia Dividend Opportunities Index, which targets high dividend-yielding stocks from S&P Indonesia LargeMidCap stocks while taking liquidity and dividend sustainability into consideration. We will review the historical performance in total return terms and explore its historical characteristics.
