5 Top Mutual Funds for Regular Dividend Income in September

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Investors’ sentiment seems to have taken a beating this year as they have lost a massive amount of wealth from the beginning of 2022. In fact, the S&P 500, the Dow and the Nasdaq have given a negative return of 15.95%, 12.56%, and 24.18%, respectively, so far this year.

The consumer price index for the month of July grew 8.5% year over year and remains at a multi-decade high. On the other hand, the Federal Reserve’s move to counter inflation by hiking interest rates has led to an increase in the cost of borrowing, which will now impact consumer spending and, as a result, curb economic growth. Fears for a recession have already surfaced and impacted the stock market.

Meanwhile, the rising geopolitical tensions between China and Taiwan could escalate into a war-like situation anytime. Russia’s continued conflict with Ukraine is already contributing to the growing fear among investors. Since these events are unlikely to fade away 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.

Columbia Commodity Strategy Fund CCOMX invests its net assets in a portfolio of commodity-linked derivative instruments. These include futures, structured notes and swaps that provide exposure to the underlying assets traded on the commodities markets, without investing directly in physical commodities. CCOMX generally seeks a total return for its shareholders.

Matthew Ferrelli has been the lead manager of CCOMX since Dec 9, 2019, and most of the fund’s holdings are in the money market (53.15%), corporate bonds (19.81%) and asset-backed securities (13.45%).

CCOMX’s dividend yield is 27.7%. The fund’s 3-year and 5-year annualized returns are 18.8% and 9.4%, respectively. The annual expense ratio of 0.89% is lower than the category average of 1.11%. CCOMX 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.

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 estates 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 PGIM QMA commodity strategies Fund (24.85%), PGIM TIPS Fund (14.68%) and PGIM Global Real Estate Fund (11.97%).

PUDZX’s dividend yield is 11.9%. The fund’s 3-year and 5-year annualized returns are 9.9% and 7.0%, 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.

Parametric Commodity Strategy Fund EAPCX seeks total return by investing most of its assets in a portfolio of commodity-linked derivatives backed by fixed-income securities. EAPCX advisors invest in U.S. Treasury securities and money market instruments for fixed-income securities, with an average holding period not exceeding one year under normal circumstances and commodity index-linked swap agreements, futures, and commodity-linked notes for commodity-linked derivative instruments.

Thomas C. Seto has been the lead manager of EAPCX since May 25, 2011, and most of the fund’s holdings are in short-term investments (97.13%) and others (2.87%).

EAPCX’s dividend yield is 11.4%. The fund’s 3-year and 5-year annualized returns are 19.5% and 11.3%, respectively. The annual expense ratio of 0.91% is lower than the category average of 1.11%. EAPCX has a Zacks Mutual Fund Rank #1.

AB All Market Real Return Portfolio AMTZX invests its assets that its fund manager believes will get affected directly or indirectly by the level and change in the rate of inflation. AMTZX advisors generally choose to invest in inflation-indexed, fixed-income securities, like TIPS and bonds issued by governments outside of the United States. These have similar characteristics, commodities, commodity-related equity securities, real estate equity securities, inflation-sensitive equity securities, securities and derivatives linked to the price of other assets and currencies.

Daniel J. Loewy has been the lead manager of AMTZX since Mar 31, 2015, and most of the fund’s holdings are in short-term investment (18.12%), others (4.04%) and Shell (2.96%).

AMTZX’s dividend yield is 13.4%. The fund’s 3-year and 5-year annualized returns are 10.4% and 7.1%, 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.

Invesco SteelPath MLP Income Fund MLPZX seeks total return by investing most of its assets, along with borrowings, if any, in master limited partnerships with companies that are engaged in transportation, storage, processing, refining, marketing, exploration, production, and mining of minerals and natural resources. MLPZX also invests in derivatives and other instruments that have similar economic characteristics.

Stuart Cartner has been the lead manager of MLPZX since Mar 31, 2010, and most of the fund’s holdings are in Energy Transfer (13.32%), MPLX LP (13.11%), Enlink Midstream (8.84%).

MLPZX’s dividend yield is 7.7%. The fund’s 3-year and 5-year annualized returns are 6.6% and 3.7%, respectively. The annual expense ratio of 1.14% is lower than the category average of 1.56%. MLPZX has a Zacks Mutual Fund Rank #2.

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