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Investing in dividend paying stocks and funds that have an objective of selecting dividend paying securities for income and/or capital appreciation is a time tested method for success as part of a model portfolio. They are popular among individuals for their retirement portfolios and as part of their taxable investments as well.

Value Line’s mutual fund database contains in excess of 20,000 open end funds and covers all dividend focused funds. This month as we highlight these funds, we have taken a dividend fund from each of the top fund families. It is important to note that despite the popularity and general success of these funds, not all families offer one to the investing public.

Ten funds are listed below, based on one year return, as of February 28, 2014, with a baseline profile for the top three. It is notable that during the periods mentioned, not once was there a negative return for shareholders.

Fund Name: Fidelity Dividend Growth Fund

Ticker: FDGFX

Top Holdings: Apple Inc. (AAPL), Exxon Mobil Corp. (XOM - Free Exxon Mobil Stock Report), Microsoft Corp. (MSFT - Free Microsoft Stock Report)

YTD Return: 0.62%

Objective: Capital appreciation.

Investment Strategy:
• Up to 80% invested in equity securities.
• Investments are made in companies that pay dividends or have the potential to pay dividends.
• Investments may be made in domestic and foreign issuers.
• Fundamental analysis as well as well as market and economic conditions is used to select investments.

Fund Name: T. Rowe Price Dividend Growth Fund

Ticker: PRDGX

Top Holdings: Crown Castle International Corp. (CCI), Danaher Corp. (DHR), McKesson Corp. (MCK)

YTD Return: 0.50%

Objective: Increasing dividend income over time, long-term growth of capital and a reasonable level of current income.

Investment Strategy:
• Invests in companies with either a track record of or potential for above average earnings or dividend growth. 
• Companies with a current competitive dividend yield.
• A sound balance sheet and solid cash flow to support future dividend increases.
• Companies with attractive valuations (i.e. P/E, Price/Cash Flow, Price Sales).

Fund Name: Vanguard Dividend Growth Fund

Ticker:  FDIGX

Top Holdings: Microsoft Corp., McDonalds Corp. (MCD - Free McDonalds Stock Report), United Parcel Service Inc. (UPS)

YTD Return: 0.28%

Objective: Primary - growing stream of income over time, secondary – long-term capital appreciation and current income.

Investment Strategy:
• Generally invest in stocks that pay current dividends.
• Invest in companies with ability to grow earnings and with a willingness to increase dividends.
• Diversify across industry sectors.

In the table below are the aforementioned ten funds. All data is compiled from the Value Line Fund Advisor database.

Dividend Funds (Top Fund Families) Performance at 02/28/2014

  

Fund Name

Ticker

% 1 Month

Total

Return

% 3

Month

Total

Return

% 6 Month

Total

Return

% 1 Year Total Return Annualized

% 5 Year

Total

Return

Annualized

Fidelity Dividend Growth Fund

FDGFX

4.09

2.81

15.04

25.07

26.04

T. Rowe Price Div Growth Fund

PRDGX

4.13

2.82

 

13.87

22.72

 

21.20

Vanguard  Div Growth Fund

VDIGX

4.74

1.67

12.28

22.66

20.28

Franklin Rising Dividends Fund

FRDAX

4.87

1.93

11.73

21.23

22.04

DWS Equity Dividend Fund

KDHSX

4.34

2.64

13.22

20.44

20.81

Eaton Vance Dividend Builder

ECTMX

4.04

2.34

13.11

19.29

16.26

Columbia Div Opportunity

CDOZX

4.07

2.45

11.45

18.63

- -

 

Invesco Dividend Income Fund

FSTUX

4.40

4.30

10.67

17.80

15.57

Blackrock Equity Dividend Fund

MSDVX

3.48

1.69

11.60

17.01

19.39

Oppenheimer Div Opportunity

OSVYX

3.21

0.18

10.14

16.25

19.08

S&P 500 Index

^GSPC

4.57

3.50

15.05

25.36

22.99

At the time of this article's writing, the author had positions in AAPL.