After a solid rebound in 2024, major U.S. indexes lost ground due to President Donald Trump's aggressive fiscal, trade and immigration policies. Investors lack confidence, as Trump's reciprocal tariff policies against major trading partners are likely to spark a global trade war. Analysts fear rising inflation and a slowdown in economic growth after the implementation of the tariffs on April 2, 2025.

As a sign of relief, the Federal Reserve Chairman Jerome Powell said after the Federal Open Market Committee meeting on March 19 that the central bank is still committed to two rate cuts by the end of this year to lower interest rates by half a percentage if economic growth slows and inflation drops. The current borrowing rate is unchanged in the range of 4.25-4.5%.

The Consumer Price Index (CPI) increased 2.8% in February, still higher than the Fed’s target of 2%. Retail sales for the month of February came in at 3.1% year over year, indicating that the economy continued to grow in the first quarter, though at a moderate pace, despite worries of an economic slowdown and rising inflation. Meanwhile, preliminary consumer sentiment for March decreased to 57.9 from 64.7 in the previous month.

In such a volatile market condition, investors looking to diversify their portfolios and earn a regular income may choose to invest in dividend-paying mutual funds like Shelton Equity Income Fund (EQTIX Quick QuoteEQTIX - Free Report) , Invesco SteelPath MLP Select 40 (MLPTX Quick QuoteMLPTX - Free Report) and Recurrent MLP & Infrastructure (RMLPX Quick QuoteRMLPX - Free Report) . These funds invest in companies that pay out regular dividends. Due to their well-established businesses and proven business models, these companies tend to remain profitable even in adverse economic situations, which benefits the performance of the fund.

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 three-year and five-year annualized returns, boast a Zacks Mutual Fund Rank #1 (Strong Buy), require a minimum initial investment within $5,000 and carry a low expense ratio. These funds have most of their exposure in sectors like technology, finance, energy, utilities and non-durable.

Our Choices

Shelton Equity Income Fund invests most of its assets, along with borrowings, if any, in domestic equity securities of companies that pay out a relatively high level of dividend income within the industry. EQTIX advisors generally invest in common stocks of large and medium capitalization U.S. companies.

Stephen C. Rogers has been the lead manager of EQTIX since Dec. 31, 2003. Most of the fund’s holdings were in companies like Apple (2.8%), NVIDIA (2.4%) and Netflix (2.3%) as of Nov. 30, 2024.

EQTIX’s dividend yield is 9.4%. The fund’s 3-year and 5-year annualized returns are 10% and 13%, respectively. EQTIX has an annual expense ratio of 0.67%.

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

Invesco SteelPath MLP Select 40 fund 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. MLPTX also invests in derivatives and other instruments that have similar economic characteristics.

Stuart Cartner has been the lead manager of MLPTX since March 31, 2010. Most of the fund’s holdings were in companies like Energy Transfer (8.6%), MPLX LP (8.1%) and Western Midstream (7%) as of Nov. 30, 2024.

MLPTX’s dividend yield is 5.1%. The fund’s 3-year and 5-year annualized returns are 24% and 22.7%, respectively. MLPTX has an annual expense ratio of 1.01%.

Recurrent MLP & Infrastructure fund invests most of its assets along with borrowings, if any, in energy infrastructure and master limited partnership investments. RMLPX advisors also invest a small portion of the investments in corporations that operate in the energy sector or hold energy assets.

Mark J. Laskin has been the lead manager of RMLPX since Oct. 24, 2017. Most of the fund’s holdings were in companies like Energy Transfer (7.1%), Cheniere Energy (6.3%) and Pembina Pipeline (6.2%) as of Oct. 31, 2024.

RMLPX’s dividend yield is 5.1%. The fund’s 3-year and 5-year annualized returns are 22.5% and 21.6%, respectively. RMLPX has an annual expense ratio of 1.10%.

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