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3 High-Yielding Mutual Funds to Buy for 2022 & Beyond

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With 2023 around the corner, a look at the stock returns reveals that the figures remained in the red with major U.S indexes like the Dow, the S&P 500 and the Nasdaq posting a negative return of 6.84%, 26.44% and 29.79%, respectively, so far this year. Various domestic and foreign factors resulted in volatility in the stock market but the major factor was domestic inflation. The consumer price index (CPI), which is an accepted gauge for inflation, was recorded at 7.7% year over year for the month of October after record highs of 8.2% in September and 8.3% in August. Supporting the number, the producer price index (PPI), which measures wholesale inflation, registered an 8% year-over-year increase in demand for finished goods in October compared with an 8.4% increase in September.

The Federal Reserve continues with its tightening monetary policy stance to meet its inflation target of 2%. Higher interest rate is pinching the pockets of consumers who have enjoyed a decade-long cheap borrowing rate, which in turn is impacting the economy vis-à-vis the stock market.

On the international front, China’s fresh COVID crisis has forced the authorities to impose restrictions, causing major supply-chain disruptions. Russia’s incessant war with Ukraine has also caused unfavorable effects for the global energy industry due to the sanction imposed by the western world to curtail its funding. 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 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 three 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), offer a minimum initial investment within $5,000 and carry a low expense ratio.

Hartford Real Asset Fund (HRLTX - Free Report) seeks to achieve long-term returns higher than the inflation rate over a macroeconomic cycle by investing in a portfolio of a globally diverse mix of investments. HRLTX advisors generally invest at least half the net assets 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 were in energy (15.60%), industrial cyclical (12.20%) and finance (10.11%) as of Oct 31, 2022.

HRLTX’s dividend yield is 14%. The fund’s 3-year and 5-year annualized returns are 6.3% and 3.7%, respectively. The annual expense ratio of 0.95% is lower than the category average of 1.00%. HRLTX has a Zacks Mutual Fund Rank #1.

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

Franklin Strategic Real Return Fund (LRRAX - Free Report) invests most of its assets in various instruments like Inflation-Linked Debt Securities, Global Equity Securities, Commodity-Linked Securities, Exchange-Traded Funds with exposure in Real Estate Investment Trusts and Tactical Strategy in decreasing proportions. LRRAX advisors oversee the asset allocation program.

S. Kenneth Leech has been the lead manager of LRRAX since Mar 31, 2014, and most of the fund’s holdings are in finance (10.31%), technology (5.41%) and industrial cyclical (3.43%) as of Oct 31, 2022.

LRRAX’s dividend yield is 11.7%. The fund’s 3-year and 5-year annualized returns are 2.70% and 2.9%, respectively. The annual expense ratio of 1.30% is almost in line with the category average of 1.29%. LRRAX has a Zacks Mutual Fund Rank #1.

Shelton Equity Income Fund (EQTIX - Free Report) invests most of its assets along with borrowings, if any, in equity securities of medium and large-cap U.S. companies. EQTIX advisors invest mostly in companies that pay out relatively high dividends and have the potential for capital appreciation.

Stephen C. Rogers has been the lead manager of EQTIX since Dec 31, 2003, and most of the fund’s holdings are in technology (24.93%), finance (14.32%) and retail trade (9.97%) as of Oct 31, 2022.

EQTIX’s dividend yield is 8.3%. The fund’s 3-year and 5-year annualized returns are 6.8% and 6.1%, respectively. The annual expense ratio of 0.69% is lower than the category average of 1.11%. EQTIX has a Zacks Mutual Fund Rank #1.

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