Dividend

Dividend mutual funds and ETFs invest in equities with the goal of... Dividend mutual funds and ETFs invest in equities with the goal of obtaining regular income via dividends. These funds can have varying mandates. Some can be value-oriented and seek to own companies that are believed to be underpriced based on different financial metrics. Other dividend funds may own growth companies, wherein they can seek to earn some income for investors, while also targeting significant capital gains as well. Depending on the mutual fund or ETF in question, it may have scope to invest in the equities of one particular country, a region, or globally. Dividend funds are available across a range of market capitalizations—some invest in small cap equities, for example, while others seek the perceived safety of larger, blue chip companies. These funds can differ in terms of the yield they target, and the risk they are willing to take on. High-yield dividend funds, for instance, invest in shares of companies with dividend yields significantly above those of mature blue-chip companies. While the potential reward is greater, a high dividend yield tends to indicate a higher likelihood that a company may not have sufficient cash flow or profits to maintain its dividend to investors. Finally, these funds also differ in terms of how often they offer payout to investors. Monthly dividend funds offer 12 payments each year, whereas a quarterly or annual fund pays out income fewer times but in greater amounts. Dividend mutual funds may be appropriate for conservative investors. Some, however (such as high-yield dividend funds) are only appropriate for more aggressive investors willing to take on more risk. Last Updated: 01/15/2025 View more View less

Dividend mutual funds and ETFs invest in equities with the goal of obtaining regular income via dividends. These funds can have varying mandates. Some can be value-oriented and seek to own companies that... Dividend mutual funds and ETFs invest in equities with the goal of obtaining regular income via dividends. These funds can have varying mandates. Some can be value-oriented and seek to own companies that are believed to be underpriced based on different financial metrics. Other dividend funds may own growth companies, wherein they can seek to earn some income for investors, while also targeting significant capital gains as well. Depending on the mutual fund or ETF in question, it may have scope to invest in the equities of one particular country, a region, or globally. Dividend funds are available across a range of market capitalizations—some invest in small cap equities, for example, while others seek the perceived safety of larger, blue chip companies. These funds can differ in terms of the yield they target, and the risk they are willing to take on. High-yield dividend funds, for instance, invest in shares of companies with dividend yields significantly above those of mature blue-chip companies. While the potential reward is greater, a high dividend yield tends to indicate a higher likelihood that a company may not have sufficient cash flow or profits to maintain its dividend to investors. Finally, these funds also differ in terms of how often they offer payout to investors. Monthly dividend funds offer 12 payments each year, whereas a quarterly or annual fund pays out income fewer times but in greater amounts. Dividend mutual funds may be appropriate for conservative investors. Some, however (such as high-yield dividend funds) are only appropriate for more aggressive investors willing to take on more risk. Last Updated: 01/15/2025 View more View less