Our all-weather dividend growth portfolio is standing up to the elements. Over the past 12 months through July 12, despite a sometimes-stormy market, T. Rowe Price Dividend Growth (symbol PRDGX), a member of the Kiplinger 25 outpaced Standard & Poor’s 500-stock index by 6.4 percentage points with a 16.3% return. “Overall, across every sector, our stocks outperformed the market” over the period, says manager Tom Huber.
Top performers include Ball, which makes aluminum cans and the popular glass canning jars. Shares have nearly doubled since July 2018, thanks to an increase in demand for its products. Shares of Air Products & Chemicals—a member of the Kiplinger Dividend 15, the list of our favorite dividend-paying stocks—are up 46.7%. The company is reaping the rewards of a broad corporate restructuring since 2013. And the stock of scientific instruments and diagnostic kits maker Danaher has rocketed 41.2%. According to Morningstar data, 70 of the fund’s 108 holdings beat the S&P 500 over the past 12 months.
Huber focuses on large, sturdy companies with solid balance sheets that generate strong free cash flow (cash profits after capital expenditures) and have the capacity to consistently raise their payouts. “A company able to raise its dividend year in and year out typically has a durable earnings and cash flow stream that holds up better than your average business in times of stress,” he says. In late 2018, Dividend Growth lost 15.1%, far less than the S&P 500’s 19.4% drop. “We earn our keep in lower-return markets or down markets,” says Huber.
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.
The fund focuses on increasing payouts rather than on high yields. At the end of March, the stocks in Dividend Growth recorded an average dividend hike of 11%, says Huber, outpacing the 8% payout increase in the S&P 500. That’s typical, he adds. Historically, Dividend Growth has yielded the same as the S&P 500, says Huber, but the fund’s holdings have boosted their payouts at a pace that’s about 2.0 to 2.5 percentage points faster, on average, than the stocks in the S&P 500.
Since Huber took over in March 2000, the fund has returned 7.9% annualized, compared with 5.7% annualized for the S&P 500.
-
What Is a Qualified Charitable Distribution (QCD)?Tax Breaks A QCD can lower your tax bill while meeting your charitable giving goals in retirement. Here’s how.
-
Embracing Generative AI for Financial SuccessGenerative AI has the potential to reshape how we approach learning about and managing our personal finances.
-
The Kiplinger 25: Our Favorite No-Load Mutual FundsThe Kiplinger 25 The Kiplinger 25 is a list of our top no-load mutual funds that have proven capable of weathering any storm.
-
The 5 Best Actively Managed Fidelity Funds to Buy Nowmutual funds In a stock picker's market, it's sometimes best to leave the driving to the pros. These Fidelity funds provide investors solid active management at low costs.
-
The 12 Best Bear Market ETFs to Buy NowETFs Investors who are fearful about the more uncertainty in the new year can find plenty of protection among these bear market ETFs.
-
Don't Give Up on the Eurozonemutual funds As Europe’s economy (and stock markets) wobble, Janus Henderson European Focus Fund (HFETX) keeps its footing with a focus on large Europe-based multinationals.
-
Best Bond Funds to BuyInvesting for Income The best bond funds provide investors with income and stability – and are worthy additions to any well-balanced portfolio.
-
Vanguard Global ESG Select Stock Profits from ESG Leadersmutual funds Vanguard Global ESG Select Stock (VEIGX) favors firms with high standards for their businesses.
-
Kip ETF 20: What's In, What's Out and WhyKip ETF 20 The broad market has taken a major hit so far in 2022, sparking some tactical changes to Kiplinger's lineup of the best low-cost ETFs.
-
ETFs Are Now Mainstream. Here's Why They're So Appealing.Investing for Income ETFs offer investors broad diversification to their portfolios and at low costs to boot.
