I was watching WealthTrack this morning and they highlighted Franklin Income Fund. Has paid a monthly dividend since 1948 and currently has a 5.76% yield. This mutual fund is a Conservative Allocation fund, but has 42% of the portfolio in stocks, which is a little bit higher than the traditional conservative model around 20% equity, but perhaps they feel strongly to overweight equities, relative to bonds. This fund has an income mandate, so it won't hold alot of cash, but feels that it can offer the same amount of income by shifting to stocks. The case in point it's top holding Merck, which the stock is yielding 4.15% and is more than it's paying on its long term bonds.
I took a look at 8 Dividend Mutual Funds and 2 Dividend ETF's and found that out of their top 10 holdings, the two most common top holdings were Exxon Mobil and Chevron. Chevron yield is 3.13% and Exxon Mobil 2.58%.
The other major holdings among the dividends funds I analyzed looked like a portfolio of Warren Buffett's. American Express, WellsFargo, CocaCola, and IBM to name a few. Buffet's stock holding 90% pay dividends, there is something to be said about dividend paying companies.
Vanguard Dividend Growth-VDIGX had a return of -25.57% in 2008 while it's benchmark the S&P 500 was down -37%. In addition, take a look at a dividend ETF, Vanguard Dividend Appreciation-VIG, which was down -26.63% in 2008 versus -37% for the S&P 500.
Dividends don't protect against losses in the short term, but over longer term periods dividend paying stocks don't have a losing 10 year period in history.
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