Top 5 Highest Yielding Equity Income Mutual Funds (Jan. 2011)

Regular dividend payments are one of the most important measures of the resilience and inherent strength of a corporation. Over time it has been observed that dividend paying stocks perform return better performance are considerably less volatile. Thus, such instruments are ideally suited for the risk-averse investor looking for a regular and steady income stream. If individual stocks also prove to be too risky, equity income mutual funds holding a well diversified portfolio of such stocks may to prove to be the optimal choice for such conservative investors.

Below we will share with you the 5 highest yielding Zacks #1 ranked equity income mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future.

Mutual Fund SEC Yield
T. Rowe Price Equity Income 1.86%
John Hancock Funds 2 Equity-Income 1 1.71%
Fidelity Equity-Income 1.52%
ING T. Rowe Price Equity Income 1.28%
Parnassus Equity Income 1.09%

T. Rowe Price Equity Income (PRFDX) invests heavily in common stocks, with 65%of is assets utilized to purchase such securities issued by leading companies. Though it focuses on acquiring on domestic common stocks, it may also invest in foreign stocks, futures and options. The equity income mutual fund has a ten year annualized return of 3.97%.

The equity income mutual fund has a minimum initial investment of $2,500 and an expense ratio of 0.72% compared to a category average of 1.27%.

John Hancock Funds 2 Equity-Income 1 (JIEMX) seeks high levels of dividend income as well as capital growth. A substantial share of the fund’s assets is utilized to purchase common stock of prominent firms which provide substantial dividend income. The equity income mutual fund returned 8.12% in the last one year period.

Brian C. Rogersis the fund manager and he has managed this equity income mutual fund since 2005.

Fidelity Equity-Income (FEQIX) invests the majority of its assets in equity securities which generate significant levels of income. It seeks to acquire large cap value stocks and purchases both domestic and foreign securities. The equity income mutual fund returned 7.44% in the last one year period.

As of November 2010, this equity income mutual fund held 198 issues, with 3.07% of its total assets invested in J.P. Morgan Chase & Co.

ING T. Rowe Price Equity Income (ITEAX) seeks total return. The fund utilizes a value approach to investing and focuses on purchasing common stock. It may also purchase convertible securities, warrants, preferred stock, futures and options. The equity income mutual fund returned 7.54% in the last one year period.

The equity income mutual fund has an expense ratio of 1.26% compared to a category average of 1.27%.

Parnassus Equity Income (PRBLX) invests at least 75% of its assets in equity securities which generate income from regular dividends. The fund holds a wide range of equity securities such as common and preferred stocks and related convertible securities. The equity income mutual fund has a five year annualized return of 5.86%.

Todd C. Ahlsten is the fund manager and he has managed this equity income mutual fund since 2001.

To view the Zacks Rank and past performance of all equity income mutual funds, then click here.

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