Investors Flee to Top Dividend Stocks

The rollercoaster stock market has investors running for shelter in the form of top-rated companies that pay high dividends or mutual funds that invest in them. All U.S. equity mutual fund categories have seen large outflows this year, except for so-called equity-income funds, which took in $11 billion through Aug. 10, Standard & Poor's said. Investors are piling into the safest stocks as the U.S. economy is slowing. Just today, Morgan Stanley lowered its forecast for global economic growth.

The firm's MarketScope Advisor unit recently highlighted its three top-rated "five-star" equity-income funds that are benefiting from those flows and suggests that "investors should follow suit" in their investment choices. Those funds are the $4 billion Columbia Dividend Income Fund(GSFTX), which has a yield of 2.36% and a loss of 3% this year; the $5.8 billion Vanguard Dividend Growth Fund(VDIGX_), which has a yield of 1.99% yield and a loss of 0.7%; and the $5.6 billion Vanguard Equity Income Fund(VEIPX_), which has a yield of 2.72% and a loss of 0.2%. The benchmark S&P 500 Index of U.S. stocks, in contrast, has fallen 4%.

Source: The Street

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