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All Contents © 2019The Kiplinger Washington Editors
By Kent Thune
| April 13, 2017
Dividend mutual funds can be a smart way to gain diversified access to dividend stocks and Vanguard dividend funds are some of the best in this space of the mutual fund universe.
Investors looking to buy dividend funds typically want current income, long-term capital appreciation, a lower-risk alternative to growth stocks, or some combination of those three objectives.
Companies that pay dividends to shareholders are often firms that are in the mature stage of their respective life cycle. This often translates into steady, reliable growth in the long run.
To top off all of these qualities of dividend stocks and dividend funds, Vanguard’s funds are some of the cheapest funds to buy, which helps to keep more income and growth in the pockets of shareholders.
All of these funds have a minimum initial investment of $3,000.
Prices and data are from the original InvestorPlace story published on April 10, 2017. Click on ticker-symbol links in each slide for current prices and more.
Expense ratio: 0.19%, or $19 for every $10,000 invested
Vanguard’s VDAIX can be a smart choice for investors wanting to hold a basket of dividend stocks in a low-cost, passively managed mutual fund. Instead of hunting for stocks of U.S. companies with a history of increasing their dividends, investors can buy VDAIX and accomplish a similar objective. VDAIX tracks a benchmark, formerly known as the Dividend Achievers Select Index, which targets companies, excluding REITs, with a track record of dividend growth. This fund holds companies such as Microsoft Corporation (MSFT), Johnson & Johnson (JNJ) and Pepsico, Inc. (PEP).
Expense ratio: 0.15%, or $15 for every $10,000 invested
This outstanding actively-managed fund that holds dividend stocks of companies with the potential to grow dividends consistently over time. As of this writing, VDIGX was closed to new investors but existing shareholders can buy new shares. Should the fund re-open to new investors in the future, investors looking for a well-managed dividend stock fund are smart to check out VDIGX.
Vanguard’s VHDYX provides access to stocks of companies that pay above-average yields. This passively-managed fund seeks to track the FTSE High Dividend Yield Index, which covers about 400 dividend stocks with high yields.
Expense ratio: 0.35%, or $35 for every $10,000 invested
Investors looking for international exposure to stocks that look to increase dividends over time will like what they see in VIAIX. This passively-managed dividend stock fund tracks the NASDAQ International Dividend Achievers Select Index, which represents about 200 stocks of companies in developed and emerging markets outside the U.S. Top holdings include stocks such as Tencent Holdings Ltd. (TCEHY), Novartis AG (NVS) and Nestle SA (NSRGY).
Expense ratio: 0.42%, or $42 for every $10,000 invested
Vanguard’s VIHIX can be a smart choice for investors looking for international stocks with high yields. This index fund tracks the FTSE AW ex US High Dividend Yield Index, which covers approximately 900 stocks of companies outside the U.S. that are expected to pay above-average dividends.
This article is from Kent Thune of InvestorPlace. As of this writing, he did not personally hold a position in any of the aforementioned securities, although he holds VTAIX in some client accounts.