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Yield Focused Stock Funds

Yield Focused Stock Funds

At the basic level, dividend focused funds invest in companies that pay decent dividends. There are actually three different kinds of dividend focused funds.

Quality Dividend: Buys stocks that are more likely to maintain their dividend payments through a variety of economic cycles and climates. Usually considered for more of a defensive approach.

Dividend Growth: Buys stocks that are likely to increase their dividend payments over time and still potentially increase in value. Usually considered for more for more of a total return approach (income & growth).

High Dividend: Buys stocks with higher dividend yields. Although there is growth potential, these are usually considered for more for a higher income approach.

Dividend focused funds can be found in most stock asset classes besides growth. They are most frequent in US Large Blend, US Large Value and International Large Blend & Value asset classes.

Real Asset funds (Real Estate and Infrastructure) can also provide some additional yield.

REIT (Real Estate Investment Trust) funds invest in office buildings, apartment buildings, warehouses, retail centers, medical facilities and data centers. Their yields are typically anywhere between 2% and 9%.

Infrastructure funds invest in all sorts of infrastructure including airports, toll roads, ports, cell phone towers, electricity transmission, oil and natural gas storage and transportation, and water treatment facilities.  Their yields are typically between 1.5% and 8%.

High yields don’t necessarily equate to high total return though. It just means higher income. As with any investment, it’s important to understand what the invest does and why you are holding it.