The Best Dividend Funds Of 2014

Dividend reinvesting is a time-honored wealth-building method. It takes advantage of the stock market’s inherent upward drift, individual stock appreciation, and the incredible power of compound interest.

Today’s ultra-low interest rate environment makes developing a diversified, dividend-paying portfolio all the more crucial to accelerate your journey toward wealth.

However, many investors lack the capital, time or inclination to build such a portfolio from the ground up.

While far from foolproof, dividend-paying mutual funds are professionally designed and managed portfolios of dividend-yielding financial instruments. These funds can also provide investors exposure to exotic derivatives and other securities that may be difficult or impossible for retail investors to access.

Let’s take a closer look at three of my favorite dividend-paying mutual funds.

Risks to Consider: These funds are subject to a variety of risks — such as those associated with real estate, derivatives, currency fluctuations and leverage — but that’s part of the deal in pursuing high yields. That’s not to mention the fees and costs to investors.

Action to Take –> I like all three of these mutual funds, with the Pimco Real Estate Real Return Strategy A (PETAX) my favorite. Making equal allocations to each is a three-pronged approach to building a well-diversified, dividend-earning portfolio.