Investors commonly deal in long-term investments due to their potential for greater returns. Some however, have unique circumstances that call for smaller, periodic payments. Investors like this benefit from dividend index funds, which pay out regular dividends from stocks or mutual funds. If you are an investor that prefers a recurrent income, it is important for you to choose a fund that is known to pay dividends regularly. Here are some of the best dividend index funds.
Vanguard High Dividend Yield Index Fund
Vanguard High Dividend Yield Index Fund is great in that its portfolio primarily consists of company stocks that yield higher-than-average dividends. It seeks to replicate benchmark stock constituents by following the FTSE High Yield Dividend Index. Vanguard has a reputation for reliability. They have a history of paying quarterly dividends in a consistent manner. It has one of the lowest expense ratios at 0.18% and a fund yield of 3.29%. This is one of the best dividend index funds for its low cost, higher-than-average dividend payouts.
Vanguard Dividend Growth Fund
The Vanguard Dividend Growth Fund has a diversified portfolio that is largely comprised of undervalued, large-cap companies. Their investments are geared towards companies that have the potential for regular dividend payments. Vanguard looks for high earnings growth potential and dividend payout increases. VDGF has a yield of 1.95% and an expense ratio of 0.32%, which are relatively low numbers. Like Vanguard High Dividend Yield Index Fund, their companies are known for their consistent dividend payouts. That, along with their potential growth, makes them one of the best dividend index funds.
T. Rowe Price Dividend Growth Fund
T. Rowe Price Dividend Growth Fund mainly invests in companies with high growth in earnings and dividends. Like Vanguard Dividend Growth Fund, T. Rowe’s portfolio is comprised of large to middle-cap companies. Companies are diversified and spread throughout various industry sectors. This is one of its main benefits. However, it is also weighed down by its relatively low yield. 1.73% is well behind the S&P index average of 2%. Still, its history of consistent quarterly payouts makes it one of the best dividend index funds at this time.
Federated Strategic Value Dividend Fund
The Federated Strategic Value Dividend Fund is the only fund on this list to offer monthly dividend payouts. This is rare among dividend index funds, which usually provide quarterly payments. It has a portfolio of large-cap and mid-cap companies, which include American depository receipts. Like most other funds, they seek companies with high dividend growth potential. It has an expense ratio of 1.06%, which is neither high nor low. Its 3.13% yield however, is well beyond the index average. Federated Strategic Value Dividend Fund stands out as one of the best dividend index funds, for its monthly dividend payouts.
Each of the funds in this list are standouts for their low expense ratios and high dividend yields. They are known for their consistent dividend payouts. They also share similar goals involving high-growth investments. Some funds however, have certain characteristics that may appeal to investors with specific needs. Evaluate the dividend index funds in this post, and choose one that fits your investing profile.
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