Regular dividend payments are one of the most important measures of the resilience and inherent strength of a corporation. Over time it has been observed that dividend paying stocks perform return better performance are considerably less volatile. Thus, such instruments are ideally suited for the risk-averse investor looking for a regular and steady income stream. If individual stocks also prove to be too risky, equity income mutual funds holding a well diversified portfolio of such stocks may to prove to be the optimal choice for such conservative investors.

Below we will share with you 5 top rated equity income mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank  past performance of all equity income funds, then click here.

Fidelity Equity-Income (FEQIX) seeks income with a secondary objective of capital growth. The majority of the fund’s assets are invested in equity securities which generate significant income. It seeks to acquire large cap value stocks and purchases both domestic and foreign securities. The equity income mutual fund returned 7.05% in the last one year period.

As of August 2010, this equity income mutual fund held 206 issues, with 3.16% of its total assets invested in J.P. Morgan Chase & Co.

American Funds Income Fund of America A (AMECX) invests heavily in dividend paying securities. It uses at least 60% of its assets to purchase equity securities but may also invest in debt. Not more than 25% of its assets may be invested in foreign securities excluded from the S&P 500 Composite Index. The equity income mutual fund has a ten year annualized return of 5.51%.

The equity income mutual fund has a minimum initial investment of $250 and an expense ratio of 0.61% compared to a category average of 1.00%.

Alpine Dynamic Dividend (ADVDX) seeks high current income from dividends as well as capital appreciation over the long term. The majority of the fund’s assets are invested in domestic and foreign companies that pay out regular dividend income. The equity income mutual fund returned 5.69% in the last one year period.

Jill Evans is the fund manager and she has managed this equity income mutual fund since 2003.

Parnassus Equity Income (PRBLX) invests at least 75% of its assets in equity securities which generate income from regular dividends. The fund holds a wide range of equity securities such as common and preferred stocks and related convertible securities. The equity income mutual fund has a five year annualized return of 5.86%.

The equity income mutual fund has a minimum initial investment of $2,000 and an expense ratio of 0.99% compared to a category average of 1.13%.

Neuberger Berman Equity Income A (NBHAX) seeks total return. The majority of its assets are invested in equity securities which generate income. This includes convertible securities, common stocks and master limited partnerships. The equity income mutual fund returned 19.68% in the last one year period.

Anthony Gleason is the fund manager and she has managed this equity income mutual fund since 2006.

To view the Zacks Rank and past performance of all equity income mutual funds, then click here.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at http://www.zacks.com/funds/mutualfund/

 
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