5 Mutual Funds With Dividend Yields Greater Than 10%

The consumer price index (CPI) reported on Oct 13 by the U.S. Bureau of Labor Statistics for the month of September increased 8.2% on a year-over-year basis, mainly attributable to the rising prices of shelter, food and medical care. The inflation rate has marginally slipped from the high of 8.3% for the month of August. The cost of living rose 0.4% for the month of September, above the forecast of a 0.3% increase, according to the economists’ poll conducted by The Wall Street Journal. An average American is suffering due to a sharp rise in prices across many consumer categories.

Investors’ sentiment continues to be bearish from the beginning of this year. The new inflation numbers reaffirm that the Fed will stick to its monetary policy tightening in a series of interest rate rises, with no less than a 75-basis-point hike in its coming meeting to dry out liquidity from the market.

Although the Fed’s expectation of achieving a 2% inflation rate seems a distant reality, the rise in the cost of borrowings is expected to weaken the economy and have a cascading effect on consumer spending, employment and other macroeconomic factors. All this could push the economy into a recession.

The major indexes like the S&P 500, the Dow and the Nasdaq composite have given a negative return of 23.0%, 17.34% and 31.93%, respectively, so far this year. Meanwhile, the rising geopolitical tensions due to increased military activity by China and fresh threats from Russia against Ukraine are also contributing to the growing fear among investors. Since these events are unlikely to be resolved soon, investors looking to diversify their portfolios and earn a regular income can choose dividend-paying mutual funds.

Mutual funds, in general, reduce transaction costs and diversify their portfolios without an array of commission charges that are mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

We have, thus, selected five mutual funds that have a promising dividend yield, have given impressive 3-year and 5-year annualized returns, boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), offer a minimum initial investment within $5,000 and carry a low expense ratio.

Arrow Managed Futures Strategy Fund MFTFX seeks to achieve its investment objective by investing most of its net assets using a fixed-income strategy that involves investing directly or indirectly through other funds in U.S. government securities, short-term, high-quality, fixed-income securities, money-market instruments, overnight and fixed-term repurchase agreements, cash, and other cash equivalents, with maturities of one year or less. MFTFX also invests a small portion of its net assets in a wholly owned and controlled subsidiary using managed futures strategies.

Joseph Barrato has been the lead manager of MFTFX since Jul 31, 2014, and most of the fund’s holdings are in others (70.75%) and finance (29.25%).

MFTFX’s dividend yield is 22.0%. The fund’s 3-year and 5-year annualized returns are 15.2% and 12.9%, respectively. The annual expense ratio of 1.54% is lower than the category average of 1.68%. MFTFX has a Zacks Mutual Fund Rank #1.

To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

Hartford Real Asset Fund HRLTX seeks to achieve long-term returns higher than the inflation rate over a macroeconomic cycle by investing in a portfolio of globally diverse mix of investments. HRLTX advisors generally invest at least half of its net assts in equity securities and the rest in fixed-income and commodity-related investments.

Brian M. Garvey has been the lead manager of HRLTX since May 28, 2010, and most of the fund’s holdings are in energy (15.60%) and industrial cyclical (12.20%).

HRLTX’s dividend yield is 14.6%. The fund’s 3-year and 5-year annualized returns are 5.2% and 2.9%, respectively. The annual expense ratio of 0.95% is lower than the category average of 1.0%. HRLTX has a Zacks Mutual Fund Rank #1.

Franklin Gold and Precious Metals Fund FKRCX invests most of its net assets in securities of domestic and foreign gold and precious metals operation companies, irrespective of its market capitalization. FKRCX advisors predominantly in non-U.S. companies with small and medium-market capitalization.

Steve M. Land has been the lead manager of FKRCX since Apr 1, 1999, and most of the fund’s holdings are in industrial cyclical (54.89%) and retail trade (20.97%).

FKRCX’s dividend yield is 13.8%. The fund’s 3-year and 5-year annualized returns are 0.8% and 2.1%, respectively. The annual expense ratio of 0.89% is lower than the category average of 1.17%. FKRCX has a Zacks Mutual Fund Rank #1.

PGIM Real Assets Fund PUDZX invests in assets that may perform well in high inflation conditions and generate positive returns after adjusting the inflation numbers. PUDZX invests in real assets like commodities, domestic and international real estate and infrastructure, natural resources, utilities, fixed-income instruments, and gold.

Edward L. Campbell has been the lead manager of PUDZX since Dec 30, 2010, and most of the fund’s holdings are in real estate (19.36%) and energy (15.74%)

PUDZX’s dividend yield is 13.3%. The fund’s 3-year and 5-year annualized returns are 5.5% and 4.5%, respectively. The annual expense ratio of 0.16% is lower than the category average of 0.84%. PUDZX has a Zacks Mutual Fund Rank #1.

AB All Market Real Return Portfolio AMTZX invests most of its net assets in inflation-indexed fixed-income securities issued by governments outside the United States, commodities, commodity-related equity securities, real estate equity securities, inflation sensitive equity securities and currencies. AMTZX invests its funds in the above-mentioned instruments which its fund manager believes will be affected directly or indirectly by the level and change in the rate of inflation.

Daniel J. Loewy has been the lead manager of AMTZX since Mar 31, 2015, and most of the fund’s holdings are in finance (28.71%) and energy (11.44%).

AMTZX’s dividend yield is 11.0%. The fund’s 3-year and 5-year annualized returns are 6.2% and 4.0%, respectively. The annual expense ratio of 0.83% is lower than the category average of 0.95%. AMTZX has a Zacks Mutual Fund Rank #2.

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