Dividend mutual funds can be a smart way to gain diversified access to dividend stocks and Vanguard dividend funds are some of the best in this space of the mutual fund universe.
Investors looking to buy dividend funds typically want current income, long-term capital appreciation, a lower-risk alternative to growth stocks, or some combination of those three objectives.
Companies that pay dividends to shareholders are often firms that are in the mature stage of their respective life cycle. This often translates into steady, reliable growth in the long run.
To top off all of these qualities of dividend stocks and dividend funds, Vanguard’s funds are some of the cheapest funds to buy, which helps to keep more income and growth in the pockets of shareholders.
All of these funds have a minimum initial investment of $3,000.
Vanguard Dividend Funds
Vanguard Dividend Appreciation Index (MUTF:VDAIX): Vanguard’s VDAIX can be a smart choice for investors wanting to hold a basket of dividend stocks in a low-cost, passively managed mutual fund. Instead of hunting for stocks of U.S. companies with a history of increasing their dividends, investors can buy VDAIX and accomplish a similar objective. VDAIX tracks a benchmark, formerly known as the Dividend Achievers Select Index, which targets companies, excluding REITs, with a track record of dividend growth. This fund holds companies such as Microsoft Corporation (NASDAQ:MSFT), Johnson & Johnson (NYSE:JNJ) and Pepsico, Inc. (NYSE:PEP). The current yield is 1.99%. The expense ratio is 0.19%, or $19 for every $10,000 invested.
Vanguard Dividend Growth (MUTF:VDIGX): This outstanding actively-managed fund that holds dividend stocks of companies with the potential to grow dividends consistently over time. As of this writing, VDIGX was closed to new investors but existing shareholders can buy new shares. The yield was 1.9%. Should the fund re-open to new investors in the future, investors looking for a well-managed dividend stock fund are smart to check out VDIGX. The expense ratio is 0.33%.
Vanguard High Dividend Yield Index (MUTF:VHDYX): Vanguard’s VHDYX provides access to stocks of companies that pay above-average yields. This passively-managed fund seeks to track the FTSE High Dividend Yield Index, which covers about 400 dividend stocks with high yields. The expense ratio is just 0.15%, or $15 for every $10,000 invested, and the minimum initial investment is $3,000.
Vanguard International Dividend Appreciation Index (MUTF:VIAIX): Investors looking for international exposure to stocks that look to increase dividends over time will like what they see in VIAIX. This passively-managed dividend stock fund tracks the NASDAQ International Dividend Achievers Select Index, which represents about 200 stocks of companies in developed and emerging markets outside the U.S. Top holdings include stocks such as Tencent Holdings Ltd. (OTCMKTS:TCEHY), Novartis AG (NYSE:NVS) and Nestle SA (ADR) (OTCMKTS:NSRGY). The expense ratio is 0.35%.
Vanguard International High Dividend Yield Index (MUTF:VIHIX): Vanguard’s VIHIX can be a smart choice for investors looking for international stocks with high yields. This index fund tracks the FTSE AW ex US High Dividend Yield Index, which covers approximately 900 stocks of companies outside the U.S. that are expected to pay above-average dividends. The expense ratio for VIHIX is 0.42%.
As of this writing, Kent Thune did not personally hold a position in any of the aforementioned securities, although he holds VTAIX in some client accounts. His No. 1 holding is his privately held investment advisory firm. Under no circumstances does this information represent a recommendation to buy or sell securities.