Large-Cap Dividend Fund: Fidelity Strategic Dividend & Income
With U.S. Treasuries and investment-grade corporate bonds providing paltry yields, many investors have been looking to blue chips for income opportunities. After all, if you can get a 3% dividend in some of the most stable utility and consumer staples stocks out there, why should you settle for half that in bonds?
If you like the idea of bigger yields and don’t mind the added equity risk of dividend stocks, then a dividend fund should be part of your 401k holdings. One of the best — and most widely held, with more than $2 billion in assets — is the Fidelity Strategic Dividend & Income Fund (MUTF:FSDIX).
The fund gets four stars from Morningstar, has no transaction charges and an expense ratio of just 0.84%. That’s an $84 charge on every $10,000 you have invested.
You can find other funds with more yield, but beware chasing large dividends in exchange for share price declines. FSDIX has a lifetime return of about 6% annually, so this is a fund that doesn’t trade big dividends for underperforming stocks.
If you’re concerned with income but don’t want to take on undue risk, consider a large-cap dividend fund in 2013.