Need Yield? These Stock Funds Have Income
Try this screen for dividend-seeking funds with winning long-term records.
Many investors seek the steady income provided by dividend-paying stocks, but companies from across the market-cap spectrum have been cutting dividends during this year's nerve-jangling market swoon. As Morningstar DividendInvestor editor Josh Peters explained in a recent article, high-yielding stocks have been more volatile than the market as a whole in the past couple years. Still, for those with long-term investment horizons, dividend-focused funds offer a great way to reap the rewards of income-generating stocks while minimizing the risk that company-specific problems will affect your entire portfolio.
Using the Premium Fund Screener, we searched for domestic-stock funds run by skilled stock-pickers. We screened for funds with top-third category rankings over the trailing 10-year period, making sure that the current management was responsible for that record.
We also zeroed in on funds with high yields. Mutual fund yields are an annual percentage measure of income (dividends and interest) earned by the portfolio's holdings, net of the fund's expenses. The Premium Fund Screener allows you to search for trailing 12-month yield, which is calculated by taking the weighted average of the yields of the stocks (or the funds if it's a fund of funds) in the portfolio for that time frame. Here, we set the screen for funds with trailing 12-month yields above the category average. We wouldn't expect this criterion to give us only dividend-focused strategies, but it should help point us in the right direction. Lastly, we required that the funds be open to new investments of $25,000 or less, with below-average expense ratios.
Karin Anderson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.