Best Vanguard Funds: Vanguard Equity Income (VEIPX)
Vanguard Equity Income (VEIPX) is a solid way to own large company stocks that pay above average dividends. This $15 billion fund is dedicated to finding slower-growing, stable companies that pay income in a meaningful way.
Michael Reckmeyer of Wellington Management handles a little more than 60% of fund assets, with Vanguard’s own equity investment group responsible for the balance of the portfolio.
The emphasis on dividend income helped the fund limit losses somewhat in the tough 2008 market, with the fund declining 31% vs. 37% for the S&P 500. Now, VEIPX is up 18% during the past year, placing it in the bottom third of its peer group. However, over the past 10 years this fund is up an annualized 7.9% and ranks in the top 10% of its category.
Financials are the leading sector here, accounting for 16% of the 163-stock portfolio, and industrials make up 15%. Recent top holdings include Johnson & Johnson (JNJ), Exxon Mobil (XOM), Chevron (CVX), Wells Fargo (WFC) and Microsoft (MSFT). Those big, dividend-paying blue chips help power a yield of 2.7%.
Annual turnover of 34%, and in typical Vanguard fashion, expenses are rock-bottom for an actively managed fund at 0.3%.
Keep in mind that last year smaller, riskier stocks were in favor. This trend will not last indefinitely … meaning VEIPX is among the best Vanguard funds to own right now.