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What has been your best dividend growth fund? Do you think stock growth or dividend growth is most important? Is a higher yield more important than stock price growth?
Here is a chart with a few funds. Interesting to look at both growth and price separately. http://tinyurl.com/7jm75z8
TIBIX has done a very good job over the last 5 years of very wild market swings. It does tend to be more volatile than a pure domestic stock play, since it owns about 40% international stocks (which pay higher dividends). SDY is one of the best of the ETF options. Another one to consider is WASIX, which owns mostly mid-cap stocks, thus giving exposure to that asset class with a much higher-than-average dividend yield.
I have and like HDV. It does not have a long history, but since inception a little less than a year back, it has done better than all the above recommendations. Only time will tell how it will do long term.
Among funds that have a decent yield, pay distributions monthly, have attractive Upside/Downside capture ratios, and have performed well over the past 3 years, my favorite continues to be PGDIX.
Not a dividend-focused fund but ACWV (iShares MSCI All Country World Minimum Volatility Index Fund) gives global access to lower volatility stocks and it tends to gravitate towards the higher-quality dividend payers. Current SEC yield is 3.80%.
Not a high-dividend fund but a high quality-dividend growth focused fund that can offer higher dividend growth versus higher yield.....is VIG. VIG is packed with a high concentration of wide-moat companies.
M* assessment on VIG:
"In mid-November, when Warren Buffett revealed that Berkshire Hathaway had taken a massive 5.4% stake in IBM , Vanguard Dividend Appreciation ETF held four of its top five holdings in common with him. This was no fluke. VIG focuses on quality dividends, demanding that companies increase them for 10 consecutive years just to make the cut. It then imposes further tests for liquidity and financial strength. The exact formula is secret but seems to weed out companies with high leverage and poor cash flow. The result is quality rather than high yield, so income-hungry investors might be surprised by a dividend yield that just matches the market. Whereas many dividend-focused funds concentrate in smaller value companies, this fund shades slightly toward growth. While we like dividends (more on that later), we think the fund's emphasis on safer yields justifies its average yield. VIG is a great choice for a core allocation."
Reply to @BobC: Bob, of the funds on this chart, TIBIX is lagging in both price and growth. It seems to have highest yield but poorest price growth over various periods. Does that concern you? What do you think it means?
Reply to @kevindow: Hi Kevin. I researched and then bought PGDIX after you mentioned it months ago. I'm also a fan. The fund is well diversified and holding up very well in this current market turmoil. Thanks for the tip.
Reply to @ron: Hi ron. Good questions! I used a 5-year look rather than 3 years, because all funds can look good, or not so good, in shorter time periods. You are correct in that it does have a higher yield, but that is because of its high allocation to international stocks (often around a 50/50 mix of domestic and international). This means, by default, that the fund will have periods when it does not do as well as domestic-only dividend funds. On a longer-term basis, however, TIBIX has done a really great job of increasing dividend yield AND growing the principle some. If you go to a 5-year time frame, it is right up there near the top, and its 10-year numbers trounce the others. But I am not one to let any manager rest on past laurels, so we will continue to monitor TIBIX, knowing that it will have more price movement than a pure domestic play. As for price growth, I would instead consider how an investor uses these funds. If it is held as a value-driven large cap, dividend reinvest investment, the important issue is total return, not price growth. On the other hand, if the investor is taking dividends as cash, price growth is perhaps a bigger issue...at least a consideration if wanting it to stay ahead of inflation. At least that's how we look at it.
For folks loooking to find a good dividend yield in a lower-volatility format, PAUDX is worth a look. Obviously the yield will change as the manager alters the fund's investment mix, but it has held up well. I for one am cautious about funds that have dividend yield as part of their name, but have very little in stocks and most in bonds. Managers will need to be darned nimble to adjust the bond allocation when interest rates rise, as well as astute enough to keep the risk of owning a lot of MLPs at an acceptable level. The last few years have been very kind to this mix. And keep in mind that M* still has not figured out where these different kinds of funds fit. For some bizarre reason, they are usually stuck together in what is termed the "world allocation" category. But it would be difficult to find a more dissimilar group of funds. Comparing them is often nigh impossible.
Reply to @BobC: For someone taking RMD and ages 76-78, might taking the distribution from TIBIX and just reinvesting in a cash or equivalent fund be a good choice rather than reinvesting as a source for the RMD?
Comments
added fagix
Hmmmmmmmm......didn't stick. The original post link may be used and then add FAGIX into the compare box.
Regards,
Catch
Kevin
Top 10 Holdings:
ENBRIDGE INC - 1.58%
AUTOMATIC DATA PROCESSING - 1.46%
TRANSCANADA CORP - 1.45%
ABBOTT LABORATORIES - 1.43%
MCDONALD'S CORP - 1.37%
SOUTHERN CO/THE - 1.34%
AMGEN INC - 1.30%
JOHNSON & JOHNSON - 1.29%
ECOLAB INC - 1.28%
NTT DOCOMO INC - 1.27%
M* assessment on VIG:
"In mid-November, when Warren Buffett revealed that Berkshire Hathaway had taken a massive 5.4% stake in IBM , Vanguard Dividend Appreciation ETF held four of its top five holdings in common with him. This was no fluke. VIG focuses on quality dividends, demanding that companies increase them for 10 consecutive years just to make the cut. It then imposes further tests for liquidity and financial strength. The exact formula is secret but seems to weed out companies with high leverage and poor cash flow. The result is quality rather than high yield, so income-hungry investors might be surprised by a dividend yield that just matches the market. Whereas many dividend-focused funds concentrate in smaller value companies, this fund shades slightly toward growth. While we like dividends (more on that later), we think the fund's emphasis on safer yields justifies its average yield. VIG is a great choice for a core allocation."
try this catch.
http://tinyurl.com/7v3vwqk
Thank you. I had an appointment and could not get back to the site in a timely manner.
Regards,
Catch
Bob, of the funds on this chart, TIBIX is lagging in both price and growth. It seems to have highest yield but poorest price growth over various periods. Does that concern you? What do you think it means?
Glad to help. PGDIX continues to deliver, and I will be increasing my allocation to this fund from 7% up to 10% in the very near future.
Kevin
Arnott April 2012 Commentary on All Asset
http://investments.pimco.com/insights/External Documents/Arnott_on_All_Asset_April_2012_PCAAA001.pdf
For someone taking RMD and ages 76-78, might taking the distribution from TIBIX and just reinvesting in a cash or equivalent fund be a good choice rather than reinvesting as a source for the RMD?
AVEDX Ave Maria Rising Dividend
Total return is what matters -- appreciation and dividends