Stocks of mature companies that have a track record of increasing dividends may give you a chance to steady your portfolio and provide a way for protection against possible economic downturns.
Donald Killbride, manager of the 38.6 billion fund, Vanguard Dividend Growth which recently reopened to offer new investors a chance to get in. Rising income from dividends has countered risk of declining value in past markets and over the long term. Killbride took over management of the fund in 2006 and has performed solidly in rough and volatile markets.
Of course dividend growth has it’s problems with lagging performances and a slew of redemptions. In 2016 for example, it returned only 7.5% compared with 12% for S&P 500. Investors pulled nearly $5 billion out of the fund.
The fund has seem to do well lately, it’s currently up 25.2% through September. The biggest holders were Coca Cola, Medtronic and McDonald’s.
While Vanguard is primarily known as a passive fund manager, Dividend Growth is not broadly diversified, holding 41 stocks at the end of August.
