If you'd rather let a pro pick rising-dividend stocks, there are plenty of solid fund choices. Don't confuse rising-dividend funds with equity-income funds, utility funds or real estate funds, which typically fill up on stocks with fat yields. Rising-dividend funds invest in strong, steadily growing companies that boost their dividends each year -- or at least are capable of doing so. Here are our three favorite low-cost dividend-growth funds.
You'll find large helpings of financial, industrial and health-care companies in most rising-dividend funds. That's true of Fidelity Dividend Growth (symbol FDGFX; 800-343-3548), but this $17-billion no-load fund also contains racier non-dividend payers, such as Cisco Systems and Juniper Networks. That's because longtime manager Charles Magnum can invest in companies with the potential to pay dividends. Over the past decade to February 1, Magnum steered the fund to an annualized 9% return, an average of two percentage points more than the return of Standard & Poor's 500-stock index. The fund, which holds 100 stocks, charges 0.59% in yearly fees. That's well below average.
| Row 0 - Cell 0 | The Lure of Rising Dividends |
| Row 1 - Cell 0 | Kiplinger's Stock Finder |
| Row 2 - Cell 0 | Latest Stock Coverage |
A by-the-book rising-dividend fund is T. Rowe Price Dividend Growth (PRDGX; 800-638-5660). In addition to increasing dividends year after year, companies in this $872-million fund typically generate annual earnings growth of 8% to 10%. Manager Tom Huber, who has led the no-load fund since March 2000, invests in companies with reasonably priced stocks, talented executives and plenty of cash on hand. His 120-stock portfolio includes a healthy dose of midsize companies, such as industrial manufacturer Roper Industries, as well as foreign stocks, such as French spirits distributor Pernod. Since Huber took over, the fund has returned an annualized 6%, an average of five percentage points a year more than the S&P 500. The fund's annual expense ratio is 0.75%.
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.
Among exchange-traded funds, iShares Dow Jones Select Dividend Index (DVY) stands out. Launched in November 2003, this ETF invests in a basket of 115 dividend-paying companies that have increased their dividends in each of the past five years. About two-thirds of assets are in financial and utility stocks, including top-ten holdings Bank of America and Pinnacle West. Select Dividend, which, like other ETFs, trades like a stock, returned an annualized 13% over the past three years, beating the S&P 500 by an average of three percentage points a year. The fund, which charges 0.40% a year for expenses, recently yielded an above-average 3.1%.
-
I'm want to give my 3 grandkids $5K each for Christmas.You're comfortably retired and want to give your grandkids a big Christmas check, but their parents are worried they might spend it all. We ask the pros for help.
-
If You're Not Doing Roth Conversions, You Need to Read ThisRoth conversions and other Roth strategies can be complex, but don't dismiss these tax planning tools outright. They could really work for you and your heirs.
-
Could Traditional Retirement Expectations Be Killing Us?A retirement psychologist makes the case: A fulfilling retirement begins with a blueprint for living, rather than simply the accumulation of a large nest egg.
-
AI Stocks Lead Nasdaq's 398-Point Nosedive: Stock Market TodayThe major stock market indexes do not yet reflect the bullish tendencies of sector rotation and broadening participation.
-
Dow Adds 646 Points, Hits New Highs: Stock Market TodayIt was "boom" for the Dow but "bust" for the Nasdaq following a December Fed meeting that was less hawkish than expected.
-
Dow Rises 497 Points on December Rate Cut: Stock Market TodayThe basic questions for market participants and policymakers remain the same after a widely expected Fed rate cut.
-
JPMorgan's Drop Drags on the Dow: Stock Market TodaySmall-cap stocks outperformed Tuesday on expectations that the Fed will cut interest rates on Wednesday.
-
Stocks Slip to Start Fed Week: Stock Market TodayWhile a rate cut is widely expected this week, uncertainty is building around the Fed's future plans for monetary policy.
-
Stocks Keep Climbing as Fed Meeting Nears: Stock Market TodayA stale inflation report and improving consumer sentiment did little to shift expectations for a rate cut next week.
-
Small Caps Hit a New High on Rate-Cut Hope: Stock Market TodayOdds for a December rate cut remain high after the latest batch of jobs data, which helped the Russell 2000 outperform today.
-
UNH Sparks a 408-Point Surge for the Dow: Stock Market TodayThe best available data right now confirm both a slowing employment market and a December rate cut, a tension reflected at the equity index level.
