3 Great Funds for Dividend Growth
We winnow a wide range of choices down to three winners: a Vanguard mutual fund, a T. Rowe fund and a Schwab ETF.
Investors looking for funds that emphasize dividend growth have an array to choose from. But you’ll have to shop carefully. Managers’ ideas of what constitutes an attractive dividend stock vary widely.
Among mutual funds, our top choice is Vanguard Dividend Growth (symbol VDIGX), a member of the Kiplinger 25. Manager Don Kilbride focuses on firms with low debt and high profitability that he believes will steadily raise their payouts. The formula has worked: Over the past 10 years through July 31, the fund gained an annualized 9.2%, compared with 7.7% for Standard & Poor’s 500-stock index. The largest holdings recently included United Parcel Service, retailer TJX Cos. and UnitedHealth Group. The annual expense ratio is 0.32%, low for an actively managed fund. Another solid choice is T. Rowe Price Dividend Growth (PRDGX), run by longtime manager Tom Huber. Like Kilbride, Huber stresses dividend growth, not current yield. The fund counts Pfizer, Visa and Pepsi among its biggest holdings. Dividend Growth, which charges 0.65% per year, returned 8.0% annualized over the past 10 years.
Among exchange-traded funds, Schwab U.S. Dividend Equity (SCHD) looks like a solid long-term bet. A member of the Kiplinger ETF 20, the fund starts with U.S. companies that have paid dividends for at least 10 years in a row, then considers factors such as dividend growth rate and return on equity to reach the final cut. Its largest holdings include Pfizer, Procter & Gamble and Johnson & Johnson. The ETF charges 0.07% annually.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
-
Timeless Trips for Solo TravelersHow to find a getaway that suits your style.
-
A Top Vanguard ETF Pick Outperforms on International StrengthA weakening dollar and lower interest rates lifted international stocks, which was good news for one of our favorite exchange-traded funds.
-
Is There Such a Thing As a Safe Stock? 17 Safe-Enough IdeasNo stock is completely safe, but we can make educated guesses about which ones are likely to provide smooth sailing.
-
More Tools to Build a Bond LadderVanguard aims to launch a line of target-maturity corporate bond ETFs.
-
Vanguard Cuts Fund Fees Again. Here's Why That's Important for YouVanguard recently cut fees on dozens of ETFs and mutual funds, which is great news for investors. Here's why.
-
Best Mutual Funds to Invest In for 2026The best mutual funds will capitalize on new trends that emerge this year, all while offering low costs and solid management.
-
Smart Ways to Invest Your Money This YearFollowing a red-hot run for the equities market, folks are looking for smart ways to invest this year. Stocks, bonds and CDs all have something to offer in 2024.
-
Vanguard's New International Fund Targets Dividend GrowthInvestors may be skittish about buying international stocks, but this new Vanguard fund that targets stable dividend growers could ease their minds.
-
Best 401(k) Investments: Where to InvestKnowing where to find the best 401(k) investments to put your money can be difficult. Here, we rank 10 of the largest retirement funds.
-
7 Best Stocks to Gift Your GrandchildrenThe best stocks to give your grandchildren have certain qualities in common. Here, we let you know what those are.
-
How to Find the Best 401(k) InvestmentsMany folks are likely wondering how to find the best 401(k) investments after signing up for their company's retirement plan. Here's where to get started.
