3 Best Fidelity Funds for Dividends

Fidelity funds offer investors a solid combination of low expenses and top performance. They also have a handful of the best funds that pay dividends.

3 Best Fidelity Funds for Dividends

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Therefore, with Fidelity funds, investors looking for high yields can get more than dividends and income; they can find the complete package of current yield and solid long-term returns.

In this light, we analyzed dozens of Fidelity funds that pay dividends and narrowed our list down to three of the best funds that have the rare combination of high yields and strong returns relative to each fund’s respective category peers.

We were also mindful not to just seek out the highest yields, but to find mutual funds that can dish out decent dividends without taking what we thought was excessive market risk.

So with that backdrop, here are the three best Fidelity funds for dividends:

Best Fidelity Funds for Dividends: Fidelity Equity Dividend & Income (FEQTX)

Next Page Best Fidelity Funds for Dividends: Fidelity Equity Dividend & Income (FEQTX)SEC Yield: 2.48%
Expenses: 0.63%, or $63 for every $10,000 invested
Minimum Initial Investment: $2,500

If you want a heavy dose of large-cap value stocks that pay dividends, you’ll want to take a look at Fidelity Equity Dividend Income (FEQTX).

Although the manager of four years, Scott Offen, took a few years to get FEQTX on a positive course, the category-beating performance in 2014 and year-to-date 2015 shows promise that returns going forward will be competitive against large-cap value funds in the long term going forward.

To achieve above-average yields — and above-average returns — Offen holds high-quality, dividend-producing stocks like JPMorgan Chase (JPM), Wells Fargo (WFC) and General Electric (GE).

Best Fidelity Funds for Dividends: Fidelity Strategic Dividend & Income (FSDIX)

SBest Fidelity Funds for Dividends: Fidelity Strategic Dividend & Income (FSDIX)EC Yield: 2.74%
Expenses: 0.74%
Minimum Initial Investment: $2,500

Investors looking for a balance of risk, return and yield will find it in Fidelity Strategic Dividend & Income (FSDIX).

FSDIX is an aggressive allocation fund that consists of roughly 75% stocks, with the remainder distributed among REITS, bonds, convertibles and cash.

In addition to decent yields, its long-term performance is a category leader. The five-year return of 10.9% beats 97% of all aggressive allocation funds and the 10-year return of 6% beats nearly 80% of category peers.

FSDIX accomplishes these returns with leading sectors of real estate, consumer defensive and healthcare and top holdings like Johnson & Johnson (JNJ), Chevron (CVX) and Pfizer (PFE).

The bond style is high-yield with an average credit rating of BB. Therefore, although FSDIX is a balanced portfolio of stocks and bonds, the aggressive style can lead to steep declines in value during bear markets.

But again, investors looking for decent current income combined with solid long-term, category-beating returns will like what FSDIX offers.

Best Fidelity Funds for Dividends: Fidelity Capital & Income (FAGIX)

Best Fidelity Funds for Dividends: Fidelity Capital & Income (FAGIX)SEC Yield: 4.20%
Expenses: 0.72%
Minimum Initial Investment: $2,500

Investors looking for a fund that pays a combination of dividends and interest, the best of Fidelity funds for you is Fidelity Capital & Income (FAGIX).

The asset allocation for FAGIX consists of approximately 70% bonds, most of which are high-yield corporate issues, and 20% stocks, including top holdings like Skyworks Solutions (SWKS), Valeant Pharmaceuticals (VRX) and HCA Holdings (HCA), with the remaining 10% allocated to cash.

This mix of high-yield corporate bonds and diverse stock holdings makes for a powerful combination that keeps FAGIX near the top of performance rankings among the high-yield bond category of mutual funds. In fact, the 10- and 15-year annualized returns, which are both 8.3%, beat that of the S&P 500, which are 7.3% and 4.7%, respectively.

Investors should keep in mind that with this fund, as with other high-yield mutual funds, those high yields can produce stock-like returns but they come with market risk that produces stock-like volatility.

As of this writing, Kent Thune did not personally hold a position in any of the aforementioned securities. His No. 1 holding is his privately held investment advisory firm in Hilton Head Island, SC. Under no circumstances does this information represent a recommendation to buy or sell securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/11/best-fidelity-funds-dividends-feqtx-fsdix-fagix/.

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