Value stocks will be delivering outsized returns one year, then suddenly, the market will be all about growth.
Whether it’s risk-on vs. risk-off, pro-cyclical sectors vs. defensive ones, growth at a reasonable price or growth at any price, no investing style works all of the time.
One thing long-term, patient investors know is that dividends never go out of style. Sure, capital appreciation is sexier, but for superior total returns over the long haul, you have to respect the power of dividends. Indeed, since 1926, dividends have represented over 50% of the market’s total return, according to research from BNY Mellon.
If you want the best of both worlds — capital appreciation and a cash stream — you should consider pursuing an equity-income strategy. A diversified portfolio of dividend-paying stocks not only delivers upside on price in bull markets, but the dividends help cushion the downside in bear markets, too.
True, you can find higher dividend yields in select stocks, but then total return is the name of the game when it comes to equity income — not to mention managing risk through a diversified portfolio.
With that in mind, we screened for great dividend-paying mutual funds — ones that, among other characteristics, had to be cheap, open to new investors for a few thousand bucks or less, and have a track record of market-beating total returns.
Here’s what we found: