A List of the Top Dividend Funds for All Stages of an Investor's Life (2024)

Dividend funds can be used wisely at any time in your investing life. In fact, many investment professionals advise that the best funds to buy are those that invest in stocks that pay dividends.

You may think you want dividend funds with the highest yields, but other factors go into finding the best funds.

Our list of best dividend funds includes only no-load mutual funds with low expense ratios. The funds that make our list are split between the mutual fund companies Vanguard and Fidelity, which are known to offer efficient pricing.

Why Invest in Dividend Funds?

Dividend stocks or funds supply a steady stream of income from dividend payments, which typically occur every quarter. This regularity makes dividend funds a good choice for retired investors.

However, those of any age can benefit. You can also choose to reinvest the dividends. This set-up is sometimes called a "dividend reinvestment program" or "DRIP." Reinvested dividends are used to buy more shares of the investment they come from.

You may also choose mutual funds that pay dividends in times whenbond mutual fundsare weak. For example, when interest rates are low, but economic conditions are generally strong, bond funds can have lower yields than dividend mutual funds.

10 Best Dividend Funds

All of these dividend funds from Vanguard and Fidelity are low-cost, no-load funds. Each fund has a slightly different style. You may want global investment or a fund with a special focus. In no special order, here are 10 of the best dividend funds for almost any investor.

1. Vanguard International High Dividend Yield Index (VIHAX)

Vanguard International High Dividend Yield Index is a passively managed fund that tracks the FTSE AW ex-U.S. High Dividend Yield Index. This is a cap-weighted index consisting of 800 stocks of international companies expected to have above-average dividend yields. VIHAX offers exposure to developed and emerging economies outside the United States, and the fund’s style is large-cap value. The minimum initial investment to buy VIHAX is $3,000, and the expense ratio is 0.28% or $28 for every $10,000 invested. VYMI is the equivalent exchange-traded fund (ETF) and can be opened for the price of one share.

2. Vanguard High Dividend Index (VHYAX)

Vanguard High Dividend Index is ideal for investors who are looking for income. The portfolio consists mainly of large-cap value stocks of companies in the United States that pay relatively high dividends. As of May 2021, the expense ratio for VHYAX is an extremely low 0.08%. That's $8 for every $10,000 invested. The minimum initial purchase is $3,000. The equivalent ETF is VYM, which has an expense ratio of 0.06% and can be opened for the price of one share.

3. Vanguard Utilities Index (VUIAX)

Vanguard Utilities Index focuses on stocks in the utilities sector. This sector is highly sought after for its high dividends. The portfolio holdings consist of large-cap U.S. stocks of utility companies, such as Duke Energy Corporation (DUK) and Southern Company (SO). As of May 2021, the expense ratio for VUIAX is an attractively low 0.10%. That's $10 for every $10,000 invested. However, this mutual fund is only offered in the Vanguard Admiral share class and has a high minimum initial purchase of $100,000. There is no minimum purchase of the ETF version of the fund, which trades under the symbolVPU and has the same expense ratio.

4. Vanguard High-Yield Corporate Fund (VWEHX)

Vanguard High-Yield Corporate Fund is actively managed. You won’t find an ETF version of this fund.Typical high-yield bond funds will hold low-credit-quality bonds, also known as "junk bonds." This fund's manager seeks bonds on the higher range of credit quality, compared to the average high-yield bond fund. So, you might say that the bonds in VWEHX aren't as "junky" as other junk bond funds. You can get the yield without quite as much risk as other high-yield funds bring. As of May 2021, the expense ratio for VWEHX is0.23%. That's $23 for every $10,000 invested. The minimum initial purchase is $3,000.​

5. Vanguard High-Yield Tax-Exempt Fund (VWAHX)

Vanguard High-Yield Tax-Exempt Fund (VWAHX) is a mutual fund that canprovide income while generating low or no taxes. Because it holds municipal bond funds, the income is not taxable at the federal level. Buyers of tax-exempt funds like VWEHX are often high-income individuals with taxable accounts. As of May 2021, expenses for VWAHX are 0.23%. That's $23 for every $10,000 invested. The minimum initial purchase is $3,000.

6. Vanguard Real Estate Index (VGSLX)

Vanguard Real Estate Index is a good way for investors to gain access to the real estate sector, which is known for its steady dividend payouts. VGSLX is among the best to buy in this category. Rising interest rates can put downside pressure on returns for real estate investment trusts (REITs). A low-interest-rate environment can keep borrowing costs low for home buyers and developers. Because these are Admiral shares, a $3,000 minimum is required. Expenses for VGSLX are 0.12% as of May 2021. That's $12 for every $10,000 invested. The ETF trades under the symbol VNQ with an expense ratio of 0.12% for the price of one share.l

7. Fidelity Equity Income (FEQIX)

Fidelity Equity Income is a solid fund that puts up average performance but above-average yields.The fund holds mostly U.S. large-cap value stocks. As of May 2021, the expense ratio for FEQIX is 0.6%. There is no minimum investment.

8. Fidelity Equity Dividend Income(FEQTX)

Fidelity Equity Dividend Income doesn’t typically lead category peers in performance. Still, It is reliable for generating income with dividends. The portfolio allocation isabout 85% U.S. stocks, 12% foreign stocks, and 2% cash and net other assets. The presence of mid-cap stocks, with large-caps, gives FEQTX a bit of an aggressive edge. As of May 2021, the expense ratio for FEQTX is low at 0.6%. There is no minimum initial purchase amount.

9. Fidelity Strategic Dividend & Income (FSDIX)

Fidelity Strategic Dividend & Income is one of the best dividend funds in the Fidelity lineup. The portfolio consists of about two-thirds U.S. large-cap stocks. The rest of the holdings are allocated among foreign stocks, bonds, cash, and convertible securities. As of May 2021, the expense ratio for FSDIX is low at 0.7%. There is no minimum initial purchase amount.

10. Fidelity Capital & Income (fa*gIX)

Fidelity Capital & Income is a balanced fund. It offers diversification and combines growth and income goals. As of May 2021, the fa*gIX portfolio consists of roughly 20%equities, 66% bonds, 11% cash, and 3% bank debt. The top holdings included Ally Financial, Caesars Entertainment, and Bank of America. Expenses are0.67%.

Frequently Asked Questions (FAQs)

What's a good dividend for a dividend fund?

To get a sense of what the average dividend rate is for stocks, look at a major stock index and see what kind of dividends it offers. SPY, the ETF that tracks the S&P 500 index, has an SEC yield of about 1.2%. DIA, which tracks the Dow Jones Industrial Average, has an SEC yield of about 1.57%. Therefore, any dividend that comes in above those rates could be considered above-average.

How do expenses affect the SEC dividend yield for mutual funds?

Expenses are subtracted from the dividend and interest payments when calculating the SEC yield. Therefore, you don't have to make any extra effort to account for expenses when comparing SEC yields for mutual funds.

What is "ex-dividend" for mutual funds?

Ex-dividend dates are the date by which you must own a mutual fund to receive the dividend payment. This is one of four dividend dates to know. There's also the declaration date, which is when dividends are announced. Then, the ex-dividend date occurs. Then, the record date marks down all the shareholders who are due payment. Finally, on the payment date, shareholders receive their dividend payment.

How do you choose between a dividend fund and a growth fund?

Dividend funds and growth funds have very different objectives, so your choice should reflect your investment goals. Growth funds aim to invest in relatively small companies that still have room to grow, and if they do, then you'll enjoy capital gains. Dividend funds are less focused on capital gains and instead invest in large, stable companies that are unlikely to grow significantly. In place of capital gains, these stable companies reward investors by sharing profits through dividends.

The Balance does not provide tax or investment advice or financial services. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circ*mstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk, including the possible loss of principal.

A List of the Top Dividend Funds for All Stages of an Investor's Life (2024)


What 10 stocks pay the highest dividends? ›

9 highest dividend-paying stocks in the S&P 500:
  • Philip Morris International Inc. (PM)
  • Vornado Realty Trust (VNO)
  • Simon Property Group Inc. (SPG)
  • International Business Machines Corp. (IBM)
  • Oneok Inc. (OKE)
  • Kinder Morgan Inc. (KMI)
  • AT&T Inc. (T)
  • Altria Group Inc. (MO)

What are the top 5 performing mutual funds? ›

These are the best U.S. equity funds based on five-year returns.
Best-performing U.S. equity mutual funds.
Fund NameTicker5-Year Return
Fidelity Series All-Sector EquityFSAEX15.52%
Parnassus Core Equity InvestorPRBLX15.51%
State Street US Core Equity FundSSAQX15.46%
T. Rowe Price U.S. Equity ResearchPRCOX15.40%
6 more rows

Can you live off dividends? ›

How to Live Off Your Dividends | Creating a Dividend Snowball

Which Vanguard ETF pays the highest dividend? ›

With many hundreds of dividend stocks, VYMI is the most diversified Vanguard dividend fund on our list. And it has the highest dividend yield. The fund usually yields between 3-5%. VYMI has a limited history, but dividend growth has been strong during this time.

Which is the best fund to invest now? ›

Here's the list of the five best mutual funds for SIP:
Fund Name3-year Return (%)*
Parag Parikh Flexi Cap Fund Direct-Growth23.52%Invest
PGIM India Flexi Cap Fund Direct-Growth22.15%Invest
Mirae Asset Emerging Bluechip Fund Direct-Growth19.30%Invest
SBI Focused Equity Fund Direct Plan-Growth14.93%Invest
3 more rows

What funds pay monthly dividends? ›

  • Global X SuperDividend ETF. Net Assets as of 8/5/21: $945 million. ...
  • Global X SuperDividend U.S. ETF. ...
  • Invesco S&P 500 High Dividend Low Volatility ETF. ...
  • WisdomTree U.S. ...
  • Invesco Preferred ETF. ...
  • Invesco KBW High Dividend Yield Financial ETF. ...
  • iShares Preferred and Income Securities ETF. ...
  • SPDR Dow Jones Industrial Average ETF Trust.

What is a good dividend mutual fund? ›

Top Dividend-Paying Mutual Funds
  • The Vanguard High Dividend Yield Index Admiral Shares (VHYAX) ...
  • The Vanguard Dividend Appreciation Index Admiral Shares (VDADX) ...
  • The Columbia Dividend Opportunity Fund (INUTX) ...
  • The Vanguard Dividend Growth Fund (VDIGX) ...
  • The T. ...
  • The Federated Strategic Value Dividend Fund (SVAAX)

What stocks pay 2021 dividends the most? ›

We have selected these five high-yield dividend stocks – PetroChina Company Limited PTR, Prudential Financial, Inc. PRU, Iron Mountain Inc. IRM, ONEOK, Inc.
5 High-Yield Dividend Stocks That Outperformed S&P 500 in 2021
  • ^GSPC.
  • OKE.
  • PTR.
  • IRM.
  • PRU.
  • MPLX.
Dec 24, 2021

Do Tesla pay dividends? ›

Plus, Tesla does not pay a dividend to shareholders, which is also an important factor for income investors to consider. As a result, we believe income investors looking for lower volatility should consider high-quality dividend growth stocks, such as the Dividend Aristocrats.

Which fund gives highest return? ›

List of Equity Mutual Funds in India
Fund NameCategory1Y Returns
PGIM India Flexi Cap FundEquity4.3%
Quant Large and Mid Cap FundEquity12.6%
BOI AXA Tax Advantage FundEquity4.7%
Axis Growth Opportunities FundEquity7.8%
12 more rows

What is the best growth and income fund? ›

With that information, here are seven funds to buy in the final months of the year.
  • Amplify High Income ETF (NYSEARCA:YYY)
  • Dimensional U.S. Equity ETF (NYSEARCA:DFUS)
  • Fidelity Large Cap Growth Index Fund (NASDDAQ:FSPGX)
  • Invesco KBW Property & Casualty Insurance ETF (NASDAQ:KBWP)
Aug 11, 2021

What is the fastest growing mutual fund? ›

PPFAS MF is the fastest growing major mutual fund house in India. Among the top 30 AMCs, PPFAS registered the highest AUM growth at 178% in FY 2021. Its AUM went up from Rs 3,138 crore to Rs 8,720 crore during the financial year.

How much money do you need to invest to live off dividends? ›

You can expect an investment portfolio to pay out dividends roughly between 1% to 6% of its value each year. At those dividend yields, you'd need a portfolio value between $100,000 and $600,000 to make $500 per month in dividends.

Can you live off dividends of 1 million dollars? ›

The average person would need to build a portfolio of at least $1 million to fully cover living expenses with dividend income. A portfolio of $2 million would produce an amount that provides a comfortable lifestyle for most people.

How much do I need to invest to make 1000 a month in dividends? ›

Look for $12,000 Per Year in Dividends

To make $1,000 per month in dividends, it's better to think in annual terms. Companies list their average yield on an annual basis, not based on monthly averages. So you can make much more sense of how much you might earn if you build your numbers around annual goals as well.

Which is better VIG or VYM? ›

In short, VIG has handily beaten VYM on every metric since inception – higher return, lower volatility, smaller drawdowns, and considerably higher risk-adjusted return (Sharpe). Over that same time period, VYM also underperformed an S&P 500 index.

Which is better iShares or Vanguard? ›

For the everyday investor, the funds that Vanguard offers are more than enough, and probably less confusing than the massive amount of options that iShares has. Vanguard is more known for their broad market and “all-in-one” ETF's when compared with iShares.

Which ETF has the highest return? ›

100 Highest 5 Year ETF Returns
SymbolName5-Year Return
ONEQFidelity Nasdaq Composite Index ETF106.11%
SPHBInvesco S&P 500® High Beta ETF106.05%
XMESPDR S&P Metals & Mining ETF106.04%
SPYGSPDR Portfolio S&P 500 Growth ETF106.01%
92 more rows

Which mutual fund is best for long term investment? ›

Top Performing Long-Term Mutual Funds to Invest in 2022
Fund NameCategory3 Year Returns
Mirae Asset Tax Saver FundEquity Linked Saving Scheme26.60%
Canara Robeco Equity Taxsaver fundEquity Linked Saving Scheme26.90%
UTI Nifty Index FundIndex Mutual Fund Growth20.70%
HDFC Index Nifty 50 fundIndex Mutual Fund Growth20.40%
6 more rows

Which mutual fund is best for 1 year investment? ›

Top Performing Funds (based on one year returns)
CategoryTop Performer1 yr
ChildrensHDFC RSF - Equity Plan - DP (G)70.80
Conservative HybridABSL Regular Savings Fund (G)28.40
ContraSBI Contra Fund - Direct (G)90.70
Dynamic BondSBI Dynamic Asset Allocation Fund-DP (D)31.10
40 more rows

Which is the best mutual fund to invest in 2022? ›

India's best performing mutual funds for May 2022
Name of Fund1-Year Return3-Year Return
ICICI Pru Regular Savings (G)6.276%8.652%
Kotak Debt Hybrid (G)5.087%10.350%
Canara Robeco Hybrid (G)3.452%8.876%
Data Source: Morningstar
6 days ago

What is the best investment for monthly income? ›

Best Investment Plan For Monthly Income
  • UTI Regular Savings Fund. ...
  • Franklin India Debt Hybrid Fund. ...
  • IDFC Regular Savings Fund. ...
  • Kotak Debt Hybrid Fund. ...
  • Reliance Hybrid Bond Fund. ...
  • Sundaram Debt Oriented Hybrid Fund. ...
  • SBI Multi Asset Allocation Fund. ...
  • DSP Regular savings Fund.

Which mutual fund gives highest monthly dividend? ›

Best Dividend Paying Mutual Funds
  • UTI Mastershare (D) - This is a large cap equity fund and has assets worth Rs. ...
  • Invesco India Growth Fund - Direct Plan (D) - This fund holds assets worth Rs. ...
  • Canara Robeco F.O.R.C.E Fund - Regular Plan (D) - It is an equity fund with assets worth Rs.

How do I make a 100 a month dividend? ›

How To Make $100 A Month In Dividends: A 5 Step Plan
  1. Choose a desired dividend yield target.
  2. Determine the amount of investment required.
  3. Select dividend stocks to fill out your dividend income portfolio.
  4. Invest in your dividend income portfolio regularly.
  5. Reinvest all dividends received.

Which Vanguard fund has the highest return? ›

Fastest growing Vanguard funds worldwide in May 2022, by one year return. The fastest growing investment fund managed by U.S. asset management company Vanguard is the Vanguard Energy Index Fund. Over the year to May 1, 2022, the mutual fund generated an annual return of 60.64 percent.

What is the safest investment with the highest return? ›

9 Safe Investments With the Highest Returns
  • Certificates of Deposit.
  • Money Market Accounts.
  • Treasury Bonds.
  • Treasury Inflation-Protected Securities.
  • Municipal Bonds.
  • Corporate Bonds.
  • S&P 500 Index Fund/ETF.
  • Dividend Stocks.
May 23, 2022

What is a high risk/high return investments? ›

High-risk investments include currency trading, REITs, and initial public offerings (IPOs). There are other forms of high-risk investments such as venture capital investments and investing in cryptocurrency market.

Which mutual fund gives highest return in last 10 years? ›

10 Mutual Funds That Have Performed Brilliantly in the Last 10 Years
  • Reliance Large Cap.
  • ICICI Prudential Bluechip Equity Fund.
  • Tata Equity P/E Fund.
  • HDFC Small Cap Fund.
  • Aditya Birla Sun Life Tax Relief 96.
  • ICICI Prudential Equity & Debt Fund.
  • Mirae Asset India Equity Fund.
  • ICICI Prudential Balanced Advantage Fund.
Mar 17, 2022

Which mutual fund is best for next 20 years? ›

12 Best SIPs For 10-20 Year Investment In FY 21 - 22
Fund Name5-Year Returns (In%)AUM (In ₹ Cr)
Axis Focus 25 Fund20.4319,456
IDFC Banking & PSU Debt Fund7.6218,069
ICICI Prudential Corporate Bond Fund7.9319,104
HDFC Money Market Fund6.4314,185
8 more rows

What stock has the most growth potential? ›

Fastest Growing Stocks
Price ($)Revenue Growth (%)
Coterra Energy Inc. (CTRA)32.60265.0
Marathon Oil Corp. (MRO)28.0849.6
CF Industries Holdings Inc. (CF)100.12173.7
2 more rows

What is Fidelity highest yielding funds? ›

3 Best Fidelity Funds for Dividends
  • Fidelity Equity Dividend Income Fund.
  • Fidelity Growth and Income Portfolio.
  • Fidelity Equity Income Fund.

Which mutual fund has highest return in last 5 years? ›

1) Axis Bluechip Fund Direct-Growth

Axis Bluechip Fund Direct Plan-Growth is an Equity Mutual Fund Scheme launched by Axis Mutual Fund and is the Highest Return Mutual Fund in Last 5 Years.

What are 4 types of investments? ›

There are four main investment types, or asset classes, that you can choose from, each with distinct characteristics, risks and benefits.
  • Growth investments. ...
  • Shares. ...
  • Property. ...
  • Defensive investments. ...
  • Cash. ...
  • Fixed interest.

How do I find the best performing mutual funds? ›

Best performing equity fund:

You may find the best performing mutual funds doing well across market cycles. You must check the alpha of the equity fund to identify the best performing mutual fund. It shows the excess return generated by the equity fund above the benchmark index.

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