IF YOU’RE SHOPPING FOR A dividend-stock fund, do what you do when you buy cereal: Look at what’s inside the box (or the portfolio, in this case) so that you know exactly what you’re getting. You can’t assume that just because a fund has dividend in its name (as hundreds do) that it will closely resemble and perform similarly to other dividend funds, or that it will be a good fit for your investment goals. “There are a lot of different flavors and a huge dispersion of strategies,” says Sean Bandazian, an analyst at Cornerstone Wealth.
Dividends have a long history of adding to a stock’s total return. The ability to pay a dividend is “a signal of a company’s strength,” says Alec Lucas, an investment strategist at Morningstar. Since 1926, dividends have contributed about one-third (32%) of the total return for the S&P 500, with the remainder coming from capital appreciation or rising stock prices, according to S&P Dow Jones Indices.
But just as cereals have different amounts of sugar, sodium and vitamins, dividend funds (even ones with essentially identical names) hold different types of dividend-paying stocks and have different sector exposures. The funds also have disparities in their fees and stock-selection criteria, depending on whether a fund is run by a stock picker or tracks an index.
The first order of business when selecting a fund is to define your goal. “Do you need to live off the dividend and turn it into a paycheck?” asks Rob Leiphart, vice president of financial planning at RB Capital Management. Or are you looking more for growth and income?
Bu hikaye Kiplinger's Personal Finance dergisinin March 2022 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Giriş Yap
Bu hikaye Kiplinger's Personal Finance dergisinin March 2022 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Giriş Yap
HOW INFLATION ADJUSTMENTS WILL AFFECT YOUR TAXES
We looked at IRS rules for 2025 on everything from tax brackets to how much you can save in retirement accounts.
GUARD AGAINST IDENTITY THEFT IN THE NEW YEAR
Scammers are getting better at impersonating legitimate businesses.
SHOULD YOU BUY PET HEALTH INSURANCE?
You can fend off big veterinary bills with a policy that covers your furry companion.
THE LOWDOWN ON BUYING A VACATION HOME
If you return to a beloved destination again and again, purchasing a home there may be a smart move-but don't overlook the costs and effort that go into it.
HOW COUPLES CAN MANAGE DIFFERING RETIREMENT TIME LINES
Staggered retirement is increasingly common, but it can create financial and emotional challenges.
AVOID THESE CREDIT MISSTEPS
KIPLINGER ADVISOR COLLECTIVE
WHAT YOU NEED TO KNOW ABOUT WORKING FOR YOURSELF
Whether you're looking for a side gig or planning to start your own business, it has never been easier to strike out on your own.
My Top 10 Stock Picks for 2025
SINCE 1993, I have offered an annual list of 10 stocks with the potential to beat the market in the 12 months ahead. My 2024 selections notched the highest return ever: an average of 48.9%. I beat the S&P 500 index by 10.8 percentage points, and every one of my stocks was up-six by more than 30%.
WHAT MAKES AN ETF SUCCESSFUL?
EXCHANGE-traded funds have exploded in popularity, with the industry now reaching the milestone of $10 trillion in assets.
TIPS FROM INSIDERS
When corporate insiders buy or sell, it can offer clues on whether you should do the same.