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%.
Sign up for Kiplinger’s Free E-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%.
-
The 401(k) Option Few Plans Offer, But Most People WantIn addition to traditional holdings, employees want retirement plans that offer options for converting savings into guaranteed monthly income that never runs out.
-
Stocks vs Funds: Six Different Ways They Impact Your PortfolioWhat are the key differences between stocks and mutual funds — and which would be better suited to your portfolio? Here are six distinctions you need to know.
-
Stock Market Today: Stocks Chop After House Passes Trump's Tax BillThe bill, which was narrowly approved by the House of Representatives, will now move to the Senate.
-
Stock Market Today: Dow Falls 817 Points as Bond Yields RiseFinancial markets are once again focused on Washington, D.C., but taxes, not tariffs, are driving recent price action.
-
Stock Market Today: Cautious Investors Let Stocks Drift LowerMarkets weigh encouraging trends for earnings and tariffs against concerning signals from U.S. consumers.
-
Stock Market Today: Markets Discount Another U.S. DowngradeAfter Friday's closing bell, Moody's followed Standard & Poor's and Fitch and cut its rating on U.S. government debt.
-
Stock Market Today: Investors Look on the Bright SideA generally good week closes on another positive note, as investors, traders and speculators look for fresh catalysts.
-
Stock Market Today: Stocks Climb More Walls of WorryVolatility is back in a normal range, and the trend for the main equity indexes remains positive despite specific and general headwinds.
-
Stock Market Today: Nasdaq Outperforms as Big Tech Rallies
The Dow Jones Industrial Average closed lower for a second day as Amgen and Merck fell.
-
Stock Market Today: UnitedHealth Drags on Dow After CEO SplitsUNH created headwinds for the price-weighted Dow on news that its embattled CEO, Andrew Witty, is stepping down.
