Columbia Dividend Opportunity Fund
The goal of the Columbia Dividend Opportunity Fund (INUTX) is to generate a high level of current income by investing in companies that consistently increase their dividends.
I’d like to think it’s exactly the type of fund that the aforementioned software designer would own if he weren’t into individual stocks.
The three portfolio managers in charge of the mutual fund have a combined 79 years of experience running money. The fund is benchmarked against the Russell 1000 Value Index, and the managers look for stocks across a broad group of sectors with attractive valuations that generate strong free cash flow and also increase dividends.
Since implementing this strategy in 2004, Columbia Dividend Opportunity has delivered distributions greater than 150% of the S&P 500. While core inflation in the past nine years has averaged 2%, INUTX has been able to deliver distribution growth more than three times inflation at 6.9%. Although most of the 120 issues it invests in are equities, it does hold several fixed-income investments. Top holdings include General Electric (GE), JPMorgan and Chevron (CVX).
For an annual expense ratio of 1.1% (and a maximum sales charge of 5.75%), you get a group of seasoned veterans providing above-average returns, and a mutual fund that Morningstar rates at four stars. You could do much worse.