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5 Mutual Funds to Buy for 2013

Snatch up one or more of these hot funds in the new year

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Vanguard Dividend Growth

Vanguard mutual funds 401(k)There are likely better ways to generate income if that’s your ultimate goal, but then again, none of those income-oriented funds will likely be able to dole out the dividend payouts you’ll be reaping two or three years from now with the Vanguard Dividend Growth (MUTF:VDIGX).

As the name implies, the fund’s aim is to increase its dividend over time, and it does so by owning companies that do the same. As an example, two of its top holdings are Pepsico (NYSE:PEP) and Procter & Gamble (NYSE:PG) — a duo of corporations that have increased their dividend for years, almost like clockwork. As of the last look, the dividend yield is 2.01%. It’s not a huge number, but it’s a number that faithfully increases every year.

If you’d rather have an ETF, consider the Vanguard Dividend Appreciation ETF (NYSE:VIG). With a yield of 2.39% right now, you’re starting off with something about as potent as the near-equivalent mutual fund, and I suspect both vehicles will ramp up their payouts at the same pace.

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