When you invest in a company, you hope that it will make a profit. If it does, the profits are either reinvested in the company or distributed to its shareholders. The former is called retained earnings of the company while the latter is called the dividend, which is a payment to the shareholders. This distribution of profits among the shareholders may be in the form of cash or, if the company has a dividend reinvestment plan, the amount can be paid by the issue of further shares or via share repurchase. The top dividend income funds for long-term investors have the following great characteristics – they charge low fees, they maintain a good diversification, they keep a low turnover, and they track the parameters that alter the business quality as well as dividend safety. Good choices to attain dividend paying stocks with a considerable dividend history are the use of a dividend index mutual fund or dividend index exchange-traded fund. Top dividend income funds work as a great investment idea for long-term growth and income from the investment. Listed below are the top dividend income funds in the US:
Schwab U.S. Dividend Equity ETF (SCHD)
The 3% dividend yield of the fund is low, yes. However, it is one of the best dividend income funds because of its low expense ratio, business quality and dividend safety, and diversification across sectors and stocks.
Vanguard Dividend Appreciation ETF (VIG)
The fund possessed 178 stocks towards the end of January 2016 and was well diversified. Its top 10 largest holdings accounted for a reasonable 36.6% of its total assets. The fund yields 2.2% dividend that might turn down some investors, but low fees and focus on quality make it a good choice for investors seeking long-term dividend growth.
Vanguard High Dividend Yield ETF (VYM)
The fund is well diversified exceeding 400 stocks in the portfolio. The top 10 positions are all blue-chip stocks. Some of the other funds have a better edge over this because of better business quality and dividend safety measures, but ignoring the Vanguard brand name and very low expense ratio won’t be fair.
S&P Dividend ETF (SDY)
For investors looking to gain exposure to companies having a high yield rate and stats showing growth in dividends, the S&P Dividend ETF might be one to be added to the of top dividend income funds.
WisdomTree U.S. Quality Dividend Growth ETF (DGRW)
This is one of the top dividend income funds because it evaluates companies based on long-term earnings, growth expectations, return on equity, and return on assets. Unfortunate part of the fund is that hasn’t been for long enough to see how it performed during the last recession, but it would seem to have above average characteristics for the business quality and dividend safety
FlexShares Quality Dividend Index Fund ETF (QDF)
Diversification is a plus point for this fund. The fund holds over 170 stocks, and its largest position is less than 4% of its total assets. This also is one of the best income funds because it offers a higher yield than the market, emphasizes business quality to reduce risk, and subject to a reasonable fee.
Columbia Dividend Opportunity Fund
This fund emphasizes yield, and it seeks to give its investors a high level of current income, with a secondary objective of growing income and capital over time.
iShares Core High Dividend ETF (HDV)
Analyzing the quality filters and low expense quotient, this fund is a valuable option for retirement income considerations. With its launch in 2011, this fund has been declared to have an above average standard characteristic chart.
PowerShares S&P 500 High Dividend Low Volatility ETF (SPHD)
Companies that are distressed are likely to have more volatile stocks. Hence the fund focuses on stocks with the lowest volatility. The fund pays monthly dividends, and skeptical income investors might feel comfortable to know that around a 20% of the fund’s assets are allocated to utility stocks, which are popular for safe payouts.
WisdomTree LargeCap Dividend Fund (DLN)
It pays monthly dividends and tracks the performance of dividend-paying large-cap companies in the U.S. equity market. The WisdomTree Large-cap Dividend Index comprises of the 300 largest companies graded by market cap from WisdomTree Dividend Index, which states the dividend-paying universe of companies in the U.S. stock market. This fund is most appropriate for investors seeking benefits of large-cap dividend-paying stocks. It would have been nice if the fund followed an index that adopted some business quality filters, but focusing on large-cap stocks makes the fund’s long-term performance foreseen.
As dividend income funds offer substantial time savings and reduce stress, an investor who builds his or her own portfolio with individual stocks can attain a meaningful fee saving and earn higher dividend yields.
There’s no right or wrong choice in the ideal option from the top dividend income funds; it’s ultimately a personal preference in most cases.