Equity funds whose primary objective is to provide regular income flows are a natural choice for investors willing to forgo long term-capital appreciation for current income. A portfolio providing income as well as holding equities also offers better diversification. Regular dividends also help to soften the blow of falling stock prices. Mutual funds holding income generating equity securities offer a convenient route to investors looking to hold a well diversified portfolio.
Below we will share with you the 5 highest yielding Zacks #1 ranked 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 and past performance of all equity income funds, then click here.
| Mutual Fund | Yield |
| American Funds Capital Income Builder A | 3.91% |
| Wasatch Strategic Income | 3.45% |
| Dreyfus Global Equity Income A | 3.24% |
| Neuberger Berman Equity Income A | 2.92% |
| Performance Strategic Dividend A | 2.76% |
American Funds Capital Income Builder A (CAIBX) invests at least 90% of its assets in fixed-income securities at least half of which is utilized to purchase equity securities. The fund holds a well diversified portfolio of income generating stocks, including foreign securities. The equity income mutual fund has a ten year annualized return of 6.53%.
The equity income mutual fund has a minimum initial investment of $250 and an expense ratio of 0.66% compared to a category average of 1.21%.
Wasatch Strategic Income (WASIX) seeks current income free with a secondary objective of capital growth. Incomes generating domestic and foreign securities constitute the fund’s major investments. At least 25% of its assets may be invested in the financial sector. The equity income mutual fund returned 10.82% over the last one year period.
The Fund Manager is Samuel S. Stewart Jr. and he has managed this equity income mutual fund since 2006.
Dreyfus Global Equity Income A (DEQAX) invests the majority of its assets in companies from mature economies which pay out regular dividends. The fund invests in stocks issued by firms of all sizes. It holds equity securities while their yield is higher than that of the FTSE World index. The equity income mutual fund returned 8.84% over the last one year period.
As of August 2010, this equity income mutual fund held 57 issues, with 12.46% of its total assets invested in Forward Exchange Contract Usd.
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 18.36% in the last one year period.
The equity income mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.16% compared to a category average of 1.38%.
Performance Strategic Dividend A (PSDHX) invests a large share of its assets in equity securities which generate regular income. Common and preferred stocks, related convertible securities and shares of real estate investment trusts constitute its major investments. The equity income mutual fund returned 13.34% over the last one year period and has a five year annualized return of 2.82%.
The Fund Manager is Louis F. Crane and he has managed this equity income mutual fund since 2004.
To view the Zacks Rank and past performance of all municipal bond 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/
