Dividend-focused mutual fund ...

Discussion in 'Stock Market Education' started by SteakTartare, Apr 18, 2014.

  1. SteakTartare

    SteakTartare Senior Investor

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    Hello all. I am in the process of doing some homework on dividend-focused funds to move some investment capital into. The one I am seriously considering is Vanguard Equity Income Fund (VEIPX).

    That said, I figured I'd toss it out there for discussion. Do you have any picks for a dividend-focused mutual fund? Any you'd avoid? What do you think about VEIPX?

    Thanks much.
     
  2. JR Ewing

    JR Ewing Super Moderator Staff Member

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    That one looks very good to me. Long track record of success and stability, pretty experienced management team, well-diversified portfolio of solid companies. Vanguard in general has some very well-managed funds.
     
  3. SteakTartare

    SteakTartare Senior Investor

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    Thanks for the insight. Everything I'm reading appears to check out.
     
  4. JadeDoo

    JadeDoo Well-Known Member

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    Usually what I tell people is to forget about mutual funds. If you want a dividend portfolio but don't have enough cash to diversify yourself, then buy a dividend focus ETF. Management fees are gonna generally be a lot lower. Plus if you look at historical performance of actively managed mutual funds vs passive ETFs. Guess what... passive ETFs outperform because active mutual funds does a lot of churning while still holding a similar basket of stocks.
     
  5. SteakTartare

    SteakTartare Senior Investor

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    Thanks for the note, JadeDoo. Do you have any ETFs you'd recommend?
     
  6. JadeDoo

    JadeDoo Well-Known Member

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    Depends what you are looking for. There's so many out there today you can pretty much find one for anything whether it be junior gold miners, Russian stock market to just the dow jones. But if you don't know what want and just looking to invest for the long-term, I suppose SPDR S&P 500 (Ticker:NYSEARC: SPY), might do the job for you. It basically just tracks all of the the S&P 500. The fees are pretty low and you can get a good diversification just by buying that. If you want to diversify more, add some ETF for foriegn countries to get international exposure.

    I am currently short SPY, but it's just for hedging purposes.
     
  7. JR Ewing

    JR Ewing Super Moderator Staff Member

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    Personally, I'm not a fan of index funds, but they are certainly better than nothing. If I was looking to allocate a certain amount of cash for dividend investing, I'd generally want to be in the companies that pay high dividends, along with having other characteristics important to me. And of course exactly which companies among those you'd want to be in could vary depending upon things like your own individual risk tolerance and how far away retirement is, whether you're using the $ for income, etc.

    Often (not always) people looking for high dividend stocks may be a little more conservative than someone like myself who focuses on growth and deep value and prefers to invest in companies that put money into things like R&D, M&A, etc.

    Generally speaking, I think both mutual funds AND ETFs can often play a role in many investors' portfolios. I have mainly stocks in my main account, along with ETFs giving me exposure to several metals, crude, nat gas, and a small S&P short position as a hedge, along with some $ allocated to cash to be available for options, quick trades, etc. My retirement account is more conservative, mainly consisting of mutual funds and a bit of ETF exposure for several of those same commodities.

    A long track record and high liquidity are important to me in investment vehicles I look at owning that are not individual securities (stocks and bonds). And for retirement funds, stability is usually a factor for most.
     
  8. JadeDoo

    JadeDoo Well-Known Member

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    It really depends what you are looking for. ETFs is great for people who are looking to invest in stocks but either are not knowledgeable enough or have the time to dissect each individual company. They are also great for people who have limited cash and want to diversify and minimize risk. Like if you only have a few thousand dollars to invest, it's not feasible from a transaction fee point of you to buy a bunch of companies to diversify yourself; in which case ETFs are great vehicles to address this issue.
     

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