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.
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.
-
Stock Market Today: Stocks Close Mixed Amid War Angst, Nvidia AnxietyMarkets went into risk-off mode amid rising geopolitical tensions and high anxiety ahead of bellwether Nvidia's earnings report.
-
What the Comcast Cable Spinoff Means for InvestorsComcast has announced plans to spin off select cable networks and digital assets into a separate publicly traded company. Here's what you need to know.
-
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.
-
Where To Invest Your 401(K)Knowing where to invest your 401(k) 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.
-
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.
-
How to Master Index InvestingIndex investing allows market participants to use baskets of stocks and bonds to build the best portfolio to meet their goals. Here's how it works.
-
Bond Basics: How to Reduce the Risksinvesting Bonds have risks you won't find in other types of investments. Find out how to spot risky bonds and how to avoid them.
-
How to Find the Best Vanguard ETFsInvestors looking for the best Vanguard ETFs would be wise to follow the philosophy of John Bogle, the asset manager's founder.
