It pays to invest in companies that regularly boost their dividends. But you don’t have to follow strict rules to succeed, as Paul Dlugosch and Scott Moore, the managers of Buffalo Dividend Focus (BUFDX), have shown. Over the past year, their two-year-old fund has bested Standard & Poor’s 500-stock index by eight percentage points.
Dlugosch and Moore focus on steady dividend raisers. But unlike some investors who employ a similar strategy, they don’t demand a certain number of years of consecutive payout boosts. The managers start with U.S.-traded stocks with a market value of at least $1 billion and a minimum yield of 2.0%—about 800 firms in all. They then home in on bargain-priced companies that have a strong competitive edge in their industry and that generate enough cash profits to support—and boost—dividends over time. The resulting portfolio includes companies that have only recently begun to pay dividends, such as Apple, and firms that have been sharing the wealth for decades, such as General Mills.
Much of the fund’s success has been fueled by its stake in energy-related master limited partnerships, says Moore. These partnerships typically own oil refineries, pipelines and other infrastructure. Shares of two holdings, Phillips 66 Partners and EQT Midstream Partners LP, both of which own and operate oil and gas pipelines, returned 96% and 68%, respectively, over the past year.
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 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.
-
Do You Have Gun Stocks in Your Funds?ESG Investors looking to make changes amid gun violence can easily divest from gun stocks ... though it's trickier if they own them through funds.
