Why Stock Dividend Funds Keep Growing

Record inflows show that investors want it all: dividend, yield, safety and growth. Can they get it?

Record inflows show that investors want it all: dividend, yield, safety and growth. Can they get it?
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In stock trading, sectors that pay relatively high dividends are outperforming the Standard & Poor's 500 index as investors pursue them for their mix of income and capital appreciation. Telecoms and cable companies have been strong over the past year among investors seeking both. Verizon and Comcast have been among the favorites, with both showing gains of over 30 percent in value over the past year, more than twice the growth of the S&P 500. Verizon's dividend yield is 3.9 percent and Comcast's is 1.9 percent.

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For those who want to invest in funds, Dickson says there are a number that track the 50 highest-yielding constituents of the S&P Composite 1500 index that have increased dividends every year for at least 25 consecutive years. One of them, the SPDR S&P Dividend ETF, has a total return of 14 percent so far this year and a 52-week return of 20 percent. Its three-year average return is 13.9 percent. Consumer-staple companies like Johnson & Johnson and Kimberly Clark are among the components.

"Those companies are managed in a way that assures steady cash flow and earnings year after year, and they focus on ways to increase the dividend," Dickson says. "That's not a bad way to manage any company. It means they pay a dividend regularly, and usually it means that not only will they go up in value but the stock's value will rise, too."