This sounds like a myth, like “Happily Ever After” in fairy tales. The Prince and Princess ride off in the sunset…. Well, I’m not promising a happy ending, nor high returns or even a 10% yield but there are ways to get more from your investments, specifically income from your stock mutual funds. The way to do this is through mutual funds that pay dividends or have yield above 1%. A dividend is a payment by the mutual fund paid to the investors or shareholders. It comes from the company’s earnings. Think of it as an interest check just for holding the mutual fund. It gives you a bit extra return. The average dividend yields today range from 1-3%. While you will not get rich, it can add a little cushion to your income and keep the possibility of your stock mutual funds appreciating as well. This is not for the aggressive and speculative investor (which most of us are NOT).
Here are some examples (I do NOT recommend you buy or sell these investments, these are just examples):
- Vanguard Dividend Growth VDIGX. Yield of 1.86% and has paid dividends consistently for years.
- T. Rowe Price Dividend Growth PRDGX. Yields of 1.24% and also has paid dividends consistently for years.
- T. Rowe Price Equity Income PRFDX. Yields of 1.81% and also has paid dividends consistently for years.
- Fidelity Strategic Dividend and Income FSDIX. Its yield is the highest of the bunch with 2.61% but it only has 2 stars so may not be worth the risk.
- Fidelity Real Estate Income FRIFX. Real estate mutual funds can be a great boon to a portfolio on many counts. This one’s yield is 4.82%, which adds income and helps with the real estate diversification.