Top 5 Best Popular Equity Income Mutual Fund plus Dividends

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Intro

In my previous articles, I have listed various types of mutual funds such as equity fund and fixed income fund. In this article, I’ll focus on dividend equity mutual fund or also known as equity income mutual funds. If you are an investor who are looking for regular income flows or dividend and with the willingness to forgo capital growth should look into these select equity funds. The fund will provide income for his or her investment needs. The presence of both debt and equity income funds in a portfolio also increases portfolio diversification. Furthermore, equity income funds provide a regular and steady income stream from dividends which can go a long way in curing losses made by falling stock prices during high volatility period such as economic crisis. This equity income funds offer investors with a handy method of holding a well diversified portfolio which generates a regular income stream. This equity income fund maybe classified within domestic equity fund as well as international equity fund.

Advantages and Disadvantages

Advantages of investing in equity income fund are:

  • Provide regular income whether it is monthly or quarterly
  • The dividend is taxed at lower tax rate
  • The dividend stock is rather stable compare to other non dividend stock. This meant it is less volatile.
  • Part of long term investment portfolio diversification

Disadvantages or risks are:

  • When the company cut the dividend, most investor will bail in investing the company. Fund value will decrease and less dividend
  • Unknown tax rate can confuse investor especially with austerity measurement by many countries. If dividend is taxed more, less income is available for investors.
  • The fund asset is smaller than other funds.

Top 5 list criteria

My top 5 equity income mutual fund list mainly consists of 3 or more star of Morningstar rating and big asset underlying the equity income mutual funds. Usually, big asset means lot of confident by investor as well constitutional to invest in these funds. With 3 or more star rating, this means the fund has consistently performed under any market condition (bear or bull market) and should perform better than many of its index benchmark. Most of these funds also consist of many diversified dividend paid companies.

Top 5 Popular Equity Income Mutual Fund are:

  1. T Rowe Price Equity Income
  2. BlackRock Equity Dividend Inv A
  3. American Century Equity Income Class A
  4. Vanguard Dividend Growth Fund
  5. Columbia Diversified Equity Income

Note: For additional List, please check my table below.

T Rowe Price Composition
T Rowe Price Composition

1. T Rowe Price Equity Income

T Rowe Price always has a good and solid mutual fund line up. If you have 401k account, you should have known T Rowe Price as the 401k account administrator. T Rowe Price Equity Income is also one of the biggest mutual funds in equity income fund. The fund seeks to provide significant dividend income as well as long-term growth of capital. The fund will mainly invest most of its assets (80%) in common stocks, with 65% in the common stocks of well-established companies paying above-average dividends. The fund invests most assets in U.S. domestic common stocks and may also purchase other securities including foreign stocks, futures, and options. The fund is managed by Brian C. Rogers since 1985. The expense ratio of this fund (PRFDX) is 0.72%. There is no 12b1 fee and sales load (front end sales load & deferred sales load) since it is a no load fund. The minimum balance to invest in this fund is $2,500 for brokerage account and $1,000 for IRA account.

The fund performance is as follows (PRFDX):

1 Year: 14.62% per year

3 Year: -6.38% per year

5 Year: 1.88% per year

10 Year: 3.89% per year

Note: This return is an annualized return

This fund is also offered in most IRA, 401K fund, and 529 account selection. Some asset classes of fund have lower expense ratio fee, and no front end sales charge fee. Other tickers of T Rowe Price Equity Income are: PAFDX and RRFDX.

As discussed before, the primary fund portfolio consists of value large cap stocks. The top 3 sectors of fund as November 2010 are Financials sector, Consumer Discretionary sector and Energy sector. Top 10 largest equity holdings for this fund include 3M (MMM), AT&T, American Express, Chevron, Exxon Mobil, General Electric, Home Depot, JPMorgan Chase, Royal Dutch Shell, and Wells Fargo.

2. BlackRock Equity Dividend Inv A

Although BlackRock is well known with its ishares ETF, it also offer various products such as mutual fund, closed end funds, money market fund and many more. The BlackRock Equity Dividend Investor A has the highest Morningstar rating of 5. It also has the highest Lipper rating of 5 (preservation). The fund investment seeks long-term total return and provides current income. The fund invests primarily in a portfolio of equity securities. It normally invests at least 80% of assets in equity securities and at least 80% of assets in dividend paying securities. The fund focuses on issuers that have good prospects for capital appreciation. It may also invest in convertible securities and non-convertible preferred stock. The fund lead manager is Robert M. Shearer since 2001. The expense ratio of this fund (PRFDX) is 1.04%. There are front end load of 5.25% and 12b1 fee of 0.25%. The minimum balance to invest in this fund is $1,000 for brokerage account and $250 for IRA account.

This fund is also offered in most IRA, 401K fund, and 529 account selection. Some asset classes of fund have lower expense ratio fee, and no front end sales charge fee. Other tickers of BlackRock Equity Dividend are: MBDVX, MCDVX, MADVX, MRDVX and MSDVX. The MADVX ticker has only 0.77% expense ratio per year and there is no other fees.

As discussed before, the primary fund portfolio consists of value large cap stocks. The top 3 sectors of fund as November 2010 are Industrial sector, Energy and Consumer Staples sector. Top 10 largest equity holdings for this fund include Chevron Corp, BHP Billiton, JPMorgan Chase & Co, Deere & Co, Exxon Mobil Corp, Total S.A ADS, Caterpillar Inc, E.I. DuPont De Nemours & Co, Wells Fargo and United Technologies Corp.

3. American Century Equity Income Class A

American Century Equity Income is another consistent performer. It has 5 star of Morningstar rating. The fund seeks to provide consistent dividend income as well as capital appreciation. The fund invests in stocks with a favorable income-paying history that has prospects for income payments to continue or increase. It invests at most of its assets (80%) in equity securities at all times and invests at least 85% of assets invested in income-paying securities. The fund also invests in equity securities of companies that the advisor believes are undervalued and have the prospective for an increase in price. The fund lead manager is Phillip Davidson since 1994. The expense ratio of this fund (TWEAX) is 1.22%. There are front end load of 5.25% and 12b1 fee of 0.25%. The minimum balance to invest in this fund is $2,500 for brokerage account.

This fund is also offered in most IRA, 401K fund, and 529 account selection. Some asset classes of fund have lower expense ratio fee, and no front end sales charge fee. Other tickers American Century Equity Income are: AEKBX, AEYIX, ACIIX, TWEIX, and AEURX. The TWEIX ticker has only 0.97% expense ratio per year and there is no other fees.

As discussed before, the primary fund portfolio consists of value large cap stocks. The top 3 sectors of fund as November 2010 are Financials, Energy and Health Care. Top 5 largest equity holdings for this fund include Exxon Mobil Corp, AT&T Inc, Bank of America (Conv), US Bancorp (Conv), Johnson & Johnson.

4. Vanguard Dividend Growth Fund

Any cost conscious investors know Vanguard Investment. Vanguard has been known with its low cost index mutual fund. The Vanguard Dividend Growth Fund investment seeks to provide a growing stream of income over time and, secondarily, long-term capital appreciation and current income. The fund invests primarily in stocks which provide current dividends. It focuses on high-quality companies that have prospects for long-term total returns as a result of their ability to grow earnings and their willingness to increase dividends over time. The fund is managed by Donald J. Kilbride since 2006. The expense ratio of this fund (VDIGX) is 0.38%. There is no 12b1 fee and sales load (front end sales load & deferred sales load) since it is a no load fund. The minimum balance to invest in this fund is $3,000 for brokerage and IRA account. There is no other class for this fund.

As discussed before, the primary fund portfolio consists of blend large cap stocks. The top 3 sectors of fund as November 2010 are Health Care, Consumer Staples and Industrials. Top 10 largest equity holdings for this fund include Automatic Data Processing Inc (ADP), Johnson & Johnson, BG Group plc, Medtronic Inc, General Dynamics Corp, International Business Machines Corp (IBM), Cardinal Health Inc, ConocoPhillips, UPS (United Parcel Services Inc), and ACE ltd.

5. Columbia Diversified Equity Income

The investment seeks a high level of current income with a secondary consideration of steady growth of capital. The fund normally invests at least 80% of assets in dividend-paying common and preferred stocks. It may invest up to 25% of assets in foreign investments. The fund may invest in any economic sector and may emphasize one or more particular sectors. The fund lead manager is Steven Schroll since 2003. The expense ratio of this fund (INDZX) is 0.99%. There are front end load of 5.75% and 12b1 fee of 0.25%. The minimum balance to invest in this fund is $2,000 for brokerage account and $1,000 for IRA account.

This fund is also offered in most IRA, 401K fund, and 529 account selection. Some asset classes of fund have lower expense ratio fee, and no front end sales charge fee. Other tickers Columbia Diversified Equity Incomeare: IDEBX, ADECX, CDVZX, IDQYX, ADIIX, RDEIX, RSEDX, and RDERX. The ADIIX ticker has only 0.50% expense ratio per year and there is no other fees.

As discussed before, the primary fund portfolio consists of value large cap stocks. The top 3 sectors of fund as November 2010 are Financials, Industrials and Energy. Top 10 largest equity holdings for this fund include XL Group plc, Lorillard Inc, Exxon Mobil Corp, Bank of America Corp, JPMorgan Chase & Co, Goldman Sachs Group Inc, Chevron Corp, AT&T Inc, Merck & Co Inc, and Microsoft Corp.

Brokerages to buy mutual funds

Usually you will need mutual fund providers as well as brokerage to buy mutual funds. Most brokerage may offer these mutual funds. Please check the following providers:

  1. Fidelity – one stop shop for mutual fund or ETF as well as cash management banking
  2. Vanguard – offer various mutual funds that track indexes as well as ETF for free
  3. T. Rowe Price – only offer their fund & famous for 401k administrator for most company
  4. Scottrade – Offer various mutual funds. 3,000 No load & No Transaction Fees (NTF) fund for free and 15,000 mutual funds as well as trading account for $7.00 per trade. You can buy the American Fund family for free and please select no load fund.

Disclosure: I have no affiliation with any of these mutual funds. I don’t have any position in these funds at this times. Please do your own research for additional details. Please trade and invest responsibly. Past Performance is No Guarantee of Future Results

(click column header to sort results)
No  
Fund Name  
Ticker  
Morningstar Rating  
Net Assets  
Yield  
Expense Ratio  
Min Invest  
1 Yr Return  
5 Yr Return  
10 Yr Return  
1
T Rowe Price Equity Income
PRFDX
4
18.1 Bil
1.95%
0.72%
$2,500
14.62%
1.88%
3.89%
2
BlackRock Equity Dividend Inv A
MDDVX
5
9.8 Bil
1.84%
1.04%
$1,000
8.42%
3.20%
4.75%
3
American Century Equity Income A
TWEAX
5
7.1 Bil
2.58%
1.22%
$2,500
7.18%
2.30%
5.94%
4
Vanguard Dividend Growth Fund
VDIGX
5
4.1 Bil
2.03%
0.38%
$3,000
13.90%
4.93%
1.69%
5
Columbia Diversified Equity Income
INDZX
3
4.0 Bil
1.32%
0.99%
$2,000
9.62%
0.99%
4.51%
6
Parnassus Equity Income
PRBLX
5
3.3 Bil
1.12%
0.99%
$2,000
13.09%
6.81%
6.17%
7
Hartford Dividend & Growth A
IHGIX
4
2.8 Bil
1.37%
1.17%
$2,000
7.22%
2.36%
3.12%
8
Vanguard Equity Income
VEIPX
4
2.6 Bil
2.73%
0.36%
$3,000
16.18%
2.64%
3.38%
9
Putnam Equity Income A
PEYAX
4
2.5 Bil
1.57%
1.21%
$0
6.39%
2.34%
3.75%
10
Allianz NFJ Dividend Value Fund A
PNEAX
3
2.1 Bil
3.30%
1.06%
$1,000
10.29%
-0.21%
5.84%
Table Comparison

Mutual Fund Investing Pooling

What is the most important things of Mutual Fund Investment?

  • Well-Known Manager
  • Fund Performance
  • Yield or Dividend
  • Part of Index fund
  • Low Expense Ratio
  • No Sales Load
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1 comment

pam 2 years ago

nice article

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