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5 Top-Ranked Mutual Funds to Buy for Regular Dividend Income

U.S. stocks have remained volatile for quite some time due to various domestic and foreign uncertainties. The recent mid-term election in the United States has flared up uncertainty in the stock market. The collapse of the FTX, which is the world’s second-largest crypto exchange after Binance, walked away from the deal due to corporate due diligence, creating a panic situation among investors.

Meanwhile, the consumer price index (CPI) increased 7.7% year over year for the month of October after record highs of 8.2% in September and 8.3% in August. Even though inflation has shown signs of cooling down, it’s still way higher than the Federal Reserve’s target of 2%. Thus, it can be expected that the Fed will continue to tighten its monetary policy, which may impact economic growth in the near term and, consequently, the stock market.

On the international front, China “The World’s Factor” is again in the grip of a fresh covid crisis. The authorities were forced to impose restrictions, causing major supply-chain disruptions. Russia’s incessant war with Ukraine has also caused unfavorable effects for the global energy industry due to the sanction imposed by the western world to curtail its funding. Since these events are unlikely to be resolved soon, investors looking to diversify their portfolios and earn a regular income can choose dividend-paying mutual funds.

Mutual funds, in general, reduce transaction costs and diversify their portfolios without an array of commission charges that are mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

We have, thus, selected five mutual funds that have a promising dividend yield, have given impressive 3-year and 5-year annualized returns, boast a Zacks Mutual Fund Rank #1 (Strong Buy), offer a minimum initial investment within $5,000 and carry a low expense ratio.

Hartford Real Asset Fund HRLTX seeks to achieve long-term returns higher than the inflation rate over a macroeconomic cycle by investing in a portfolio of a globally diverse mix of investments. HRLTX advisors generally invest at least half its net assets in equity securities and the rest in fixed-income and commodity-related investments.

Brian M. Garvey has been the lead manager of HRLTX since May 28, 2010, and most of the fund’s holdings are in energy (15.60%), industrial cyclical (12.20%) and finance (10.11%) as of 10/31/2022.

HRLTX’s dividend yield is 14.0%. The fund’s 3-year and 5-year annualized returns are 6.3% and 3.7%, respectively. The annual expense ratio of 0.95% is lower than the category average of 1.00%. HRLTX has a Zacks Mutual Fund Rank #1.

To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

Franklin Gold and Precious Metals Fund FGADX seeks capital appreciation along with current income through dividends or interest by investing most of its net assets in securities of gold and precious metals operation companies. FGADX invests mostly in non-U.S. companies with small and medium-market capitalization.

Steve M. Land has been the lead manager of FGADX since Apr 1, 1999, and most of the fund’s holdings are in industrial cyclical (12.20%), retail trade (28.97%) and non-durable (3.25%) as of 10/31/2022.

FGADX’s dividend yield is 13.3%. The fund’s 3-year and 5-year annualized returns are 1.0% and 2.4%, respectively. The annual expense ratio of 0.65% is lower than the category average of 1.17%. FGADX has a Zacks Mutual Fund Rank #1.

Franklin Strategic Real Return Fund LRRAX invests most of its assets in various instruments like Inflation-Linked Debt Securities, Global Equity Securities, Commodity-Linked Securities, Exchange-Traded Funds with exposure in Real Estate Investment Trusts and Tactical Strategy in decreasing proportions. LRRAX advisors oversee the asset allocation program.

S. Kenneth Leech has been the lead manager of LRRAX since Mar 31, 2014, and most of the fund’s holdings are in finance (10.31%), technology (5.41%) and industrial cyclical (3.43%) as of 10/31/2022.

LRRAX’s dividend yield is 11.7%. The fund’s 3-year and 5-year annualized returns are 2.7% and 2.9%, respectively. The annual expense ratio of 1.30% is in line with the category average of 1.30%. LRRAX has a Zacks Mutual Fund Rank #1.

AB Global Risk Allocation Fund Class I CABIX seeks total return using income and long-term capital growth by investing in various global asset classes like equity, fixed-income, and inflation-sensitive instruments. CABIX advisors invest most of its net assets in equity securities, followed by fixed-income securities with short- to long-term maturity periods and high-yield securities.

Leon Zhu has been the lead manager of CABIX since Oct 8, 2012, and most of the fund’s holdings are in finance (12.88%), technology (5.44%) and industrial cyclical (4.15%) as of 10/31/2022.

CABIX’s dividend yield is 10.5%. The fund’s 3-year and 5-year annualized returns are 4.6% and 3.7%, respectively. The annual expense ratio of 1.01% is lower than the category average of 1.29%. CABIX has a Zacks Mutual Fund Rank #1.

Shelton Equity Income Fund EQTIX invests most of its assets along with borrowings, if any, in equity securities of medium and large-cap U.S. companies. EQTIX advisors invest mostly in companies that pay out relatively high dividends and have the potential for capital appreciation.

Stephen C. Rogers has been the lead manager of EQTIX since Dec 31, 2003, and most of the fund’s holdings are in technology (24.93%), finance (14.32%) and retail trade (9.97%) as of 10/31/2022.

EQTIX’s dividend yield is 8.3%. The fund’s 3-year and 5-year annualized returns are 6.8% and 6.1%, respectively. The annual expense ratio of 0.69% is lower than the category average of 1.11%. EQTIX has a Zacks Mutual Fund Rank #1.

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