Opportunities In Dividend Funds

Seeking safety, and perhaps an income stream impossible to find among fixed-income securities, many investors raced to buy dividend payers in sectors such as utilities, real estate, and consumer staples. During the past three years through June 14, iShares Dow Jones Select Dividend ETF (DVY) returned 17.5%, outpacing the S&P 500 by a percentage point, according to Morningstar. But in the downdraft of recent weeks, dividend stocks sank especially hard. While the S&P 500 declined 1.2% in the past month, utilities funds lost 3.6%, and real estate funds fell 7.8%.

But three prominent dividend fund managers said that plenty of their stocks still sell at reasonable prices. Speaking at the Morningstar Investment Conference in Chicago last week, the managers said that many dividend stocks yield more than 3%, a healthy payout at a time when 10-year Treasuries yield 2.13%. The funds represented on the panel included ClearBridge Equity Income (SOPAX), Matthews Asia Dividend (MAPIX), and Tweedy, Browne Worldwide High Dividend Yield (TBHDX). Selected for the panel by Morningstar analysts, the managers are all industry veterans with solid track records.

Source: Wealth Management

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