Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
International covers a Taiwanese manufacturer yielding 9.5%... a
rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
Government's Biofuel Timetable Could Spell +15,900% Growth
+15,900% growth might seem far-fetched... but it's not. In fact, it
is mandated by law. And I've identified the ONLY stock positioned to
capture this growth.
The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
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| The
Benefits of Dividend-Focused Mutual Funds |
Published: September 7, 2005
If you're an income-oriented
investor, then you may want to consider putting a portion of your
portfolio in the hands of a professional money manager -- especially one
with expertise in the income field. One of the best ways to do this is
to invest in a well-diversified mutual fund.
The good news is that
dividend-focused equity funds can provide you with much more than just a
regular income stream. Because they hold a mix of stocks from different
industries, they can also reduce your portfolio risk.
However, you do pay for the benefit of having an experienced money
manager who keeps the portfolio as profitable as possible. So you want
to check out additional expenses -- management expense ratios, sales
fees, taxes -- that could cut into your yield. A fund with an enticing
5% dividend yield but a 1.5% expense ratio carries an effective yield of
just 3.5%.
Before investing, you'll also want to carefully examine each fund's
specific portfolio holdings. Some high-yielding funds focus all their
portfolio holdings on one sector. For instance, although AEW Real Estate
Income Fund (RIF) sports an enticing 7.2% yield, it also exposes
investors exclusively to the highly interest rate sensitive REIT sector.
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Some funds hold a mix of both
stocks and bonds in their portfolios. Bonds may juice the yield, but
they could also be more vulnerable to interest rate changes. With this
in mind, a conservative investor looking for a stable income stream may
prefer to stick with a portfolio of quality stocks.
Also, the dividend portion that comes from stocks would likely qualify
for the reduced 15% dividend tax rate. By contrast, any bond income
would be taxed at the higher income tax rate.
With these thoughts in mind, I recently searched through the investment
universe to find dividend-focused funds with the highest yields, the
most diverse stock portfolios, and the lowest expense ratios. To pass
the muster, a fund needed to meet these criteria:
-- Dividend yield of at least 5%
-- Diverse stock portfolio with no more than 5% bond holdings
-- Expense ratio no more than 30% of the dividend yield
The following seven funds met all of these criteria (ranked by dividend
yield):
| Name |
Symbol |
Sept.
6th Price |
Yield |
| Kelmoore
Strategy Eagle A |
KSEAX |
$13.80 |
18.2% |
| Kelmoore
Strategy C |
KSOIX |
$31.57 |
11.1% |
| Alpine
Dynamic Dividend |
ADVDX |
$12.61 |
10.8% |
| Kelmoore
Strategy Liberty A |
KSLAX |
$53.77 |
10.1% |
| Diversified
Mid-Cap Value |
DVMVX |
$14.81 |
8.0% |
| DFA
U.S. Small XM Value |
DFFVX |
$17.18 |
5.5% |
| ING
Corporate Leaders B |
LEXCX |
$18.59 |
4.8% |
Important
Note: To view the remainder of this article, in which
Carla Pasternak provides an in-depth analysis of her favorite funds from
the list above, you'll need to subscribe to our premium High-Yield
Investing newsletter. After you subscribe you'll receive
immediate access to the remainder of this article, as well as our
semimonthly High-Yield Investing newsletter and a host of
additional premium content. Please visit one of the following links to
continue...
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