What is the best mutual fund for dividends?

There are many good dividend mutual funds. Some funds focus on higher-yielding dividend stocks, while others concentrate on companies that can grow their dividends. The best dividend mutual fund for a retiree (higher-yielding dividend stocks) might not be the best one for a younger investor (dividend growth stocks). However, the Vanguard High Dividend Yield Index Fund is one of the best due to its broad, low-cost access to higher-yielding dividend stocks.

Are dividend mutual funds a good idea?

Dividend mutual funds can be a good idea. They enable investors to own a diversified portfolio of dividend-paying stocks to generate income and capitalize on stock price appreciation. Historically, dividend stocks have delivered higher returns than the average S&P 500 stock. That data suggests that a dividend-focused mutual fund can be a good investment.

Which mutual fund is best for monthly dividends?

Many of the top dividend mutual funds make quarterly distributions to investors. However, the Federated Hermes Strategic Value Dividend Fund pays investors monthly, making it one of the best mutual funds for those seeking monthly dividends.

Which fund has the highest dividend?

Mutual fund dividend yields can fluctuate from month to month based on the fund's price and the dividend income generated by its current holdings. As of mid- 2026, the JPMorgan Equity Premium Income Fund (NASDAQMUTFUND: JEPA.X) had one of the highest dividend yields among income-focused mutual funds at 8% over the trailing-12-month period. The fund owns dividend-paying stocks and generates additional income by writing call options on the S&P 500.

Can I reinvest dividends from my mutual funds?

Yes, you can reinvest dividends from your mutual funds. Most funds offer a dividend reinvestment plan (DRIP) that automatically reinvests your mutual fund dividends.

5 Best High Dividend Mutual Funds to Buy in 2026

A closer look at some of the top dividend mutual funds for yield-seeking investors.

By Matthew DiLallo – Updated Mar 17, 2026 at 10:41 AM EST | Fact-checked by Frank Bass

Key Points

Dividend mutual funds invest in dividend-paying stocks, offering income and diversification.
Pay close attention to expense ratios in dividend mutual funds, as they can cut into your income stream.
Consider dividend yield, growth rate, and fund expenses when selecting a dividend mutual fund.

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1. Federated Hermes Strategic Value Dividend Fund

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NASDAQMUTFUND: SVAAX

Federated Hermes Equity Funds - Federated Hermes Strategic Value Dividend Fund

Today's Change

(-0.44%) $-0.03

Current Price

$6.85

Key Data Points

Day's Range

$6.85 - $6.85

52wk Range

$6.85 - $6.85

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The Federated Hermes Strategic Value Dividend Fund (SVAA.X -0.44%) aims to generate income and long-term capital appreciation. It invests in stocks with higher dividend yields than a broad equity market index and with dividend growth potential. This actively managed mutual fund benchmarks its performance against the S&P 500 and the Dow Jones U.S. Select Dividend index.

As of mid-2026, the fund had $9.4 billion of assets under management (AUM) and held about 45 stocks. The top five fund holdings were:

TotalEnergies (TTE +0.17%)
Chevron (CVX -0.34%)
British American Tobacco (BTI -1.80%)
U.S. Bancorp (USB +0.73%)
Sanofi (SNY -1.40%)

The fund focuses on sectors known for paying attractive dividends. Its portfolio holdings by sector included financials (18.1% of its assets), energy (16.7%), utilities (15.7%), healthcare (14.2% ), and consumer staples (13.3%).

The mutual fund had a weighted average dividend yield of 4.1%. That was considerably above the S&P 500's 1.2% dividend yield, which was around its lowest level in more than 20 years in mid-2026.

This dividend mutual fund generally has a minimum investment of $1,500. The relatively low minimum investment makes it easy for investors to start collecting passive income. A notable feature of this fund is that it pays dividends monthly.

The one mark against the fund is its expense ratio. With a net expense ratio of 0.81%, it's well above the mutual fund industry's average of 0.42%. The higher cost is the price investors pay for an actively managed fund that aims to deliver returns above those of a market index.

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2. Vanguard High Dividend Yield Index Fund Admiral Shares

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NASDAQMUTFUND: VHYAX

Vanguard Whitehall Funds - Vanguard High Dividend Yield ETF

Today's Change

(0.50%) $0.24

Current Price

$47.99

Key Data Points

Day's Range

$47.99 - $47.99

52wk Range

$47.99 - $47.99

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The Vanguard High Dividend Yield Index Fund (VHYA.X +0.50%) provides broad exposure to U.S. companies that have consistently paid above-average dividends. It emphasizes slower-growing, higher-yielding companies.

This passively managed mutual fund benchmarks its returns against the FTSE High Dividend Yield index. The index tracks stocks of U.S. companies that have paid above-average dividends for the past 12 months, excluding real estate investment trusts (REITs).

As of mid-2026, the fund had $92.3 billion of net assets and held around 560 stocks. The top five fund holdings were:

Broadcom (AVGO +4.75%)
JPMorgan Chase (JPM +0.87%)
ExxonMobil (XOM -1.16%)
Johnson & Johnson (JNJ -2.42%)
Chevron

The fund had a 30-day SEC yield of 2.4% (more than double the S&P 500's yield at the time) and distributed dividends quarterly. Like the FTSE High Dividend Yield index, the fund weights heavily toward industries known for paying attractive dividends. Its top five sectors were financials (19.4% of the fund's holdings), industrials (13.8%), healthcare (12.9%), technology (12.3%), and consumer discretionary (10.1%).

The mutual fund has an ultra-low expense ratio of 0.08%, well below the industry average. The fund also has a minimum investment of $3,000. It's worth pointing out that Vanguard offers a similar exchange-traded fund (ETF), Vanguard High Dividend ETF (VYM +0.55%), with a slightly lower expense ratio (0.06%) and a low minimum investment of one share (around $150 as of mid-2026).

3. Vanguard Equity Income Fund Investor Shares

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NASDAQMUTFUND: VEIPX

Vanguard Fenway Funds - Vanguard Equity Income Fund

Today's Change

(0.52%) $0.25

Current Price

$48.01

Key Data Points

Day's Range

$48.01 - $48.01

52wk Range

$48.01 - $48.01

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The Vanguard Equity Income Fund (VEIP.X +0.52%) aims to provide investors with above-average current income. It invests in U.S. companies that consistently pay high dividends. The actively managed mutual fund benchmarks its returns against the FTSE High Dividend Yield index.

As of mid-2026, the fund had $65.8 billion of assets and held more than 200 stocks. The top five fund holdings were:

Broadcom
Merck (MRK -0.98%)
JPMorgan Chase
Bank of America (BAC +1.58%)
Johnson & Johnson

The fund had a 30-day SEC yield of 2.1% and distributed dividends quarterly. The dividend mutual fund also focuses on sectors known for paying attractive dividends. Its top five sectors were financials (19.9% of the fund's holdings), healthcare (15%), information technology (13.7%), industrials (12.4%), and consumer staples (10.6%).

The mutual fund has an expense ratio of 0.26% (almost half the industry average) and a minimum investment of $3,000. Vanguard also offers a lower-cost version of the fund (Admiral Shares) with an expense ratio of 0.17%. However, it has a much higher minimum investment of $50,000.

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4. T. Rowe Price Dividend Growth

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NASDAQMUTFUND: PRDGX

T. Rowe Price Dividend Growth Fund, Inc.

Today's Change

(0.16%) $0.14

Current Price

$87.12

Key Data Points

Day's Range

$87.12 - $87.12

52wk Range

$87.12 - $87.12

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The T. Rowe Price Dividend Growth Fund (PRDG.X +0.16%) focuses on stocks with strong dividend records or that should increase their payouts over time.

As of mid-2026, the fund had $22.7 billion of assets and held more than 90 stocks. The top five fund holdings were:

Apple (AAPL -0.20%)
Microsoft (MSFT +5.25%)
Broadcom
JPMorgan Chase
Visa (V +0.84%)

The dividend mutual fund focuses on sectors known for paying growing dividends. Its top five sectors were information technology (22.6% of the fund's holdings), financials (19.3%), industrials and business services (14.5%), healthcare (12.9%), and consumer staples (7.1%).

The mutual fund has an expense ratio of 0.64% (about half the industry average) and a minimum investment of $2,500 for the investor class shares. T. Rowe Price also offers a Dividend Growth ETF (TDVG +0.08%) with similar holdings at a lower expense ratio (0.5%).

5. BlackRock Equity Dividend

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NASDAQMUTFUND: MDDVX

BlackRock Equity Dividend Fund

Today's Change

(-0.22%) $-0.05

Current Price

$22.49

Key Data Points

Day's Range

$22.49 - $22.49

52wk Range

$22.49 - $22.49

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Dividend mutual fund FAQ

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About the Author

Matt DiLallo has been a contributing Motley Fool stock analyst specializing in the energy, industrials, and real estate sectors since 2012. He also covers dividend-paying stocks, pre-IPO companies, ETFs, and other investing topics. He holds an MBA from Liberty University.

TMFmd19

@MatthewDiLallo

Citigroup is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Wells Fargo is an advertising partner of Motley Fool Money. Matt DiLallo has positions in Amazon, Apple, Broadcom, JPMorgan Chase, Johnson & Johnson, Prologis, and Visa and has the following options: short May 2026 $280 calls on Apple. The Motley Fool has positions in and recommends Amazon, Apple, JPMorgan Chase, Merck, Microsoft, Prologis, U.S. Bancorp, Vanguard High Dividend Yield ETF, and Visa. The Motley Fool recommends British American Tobacco P.l.c., Broadcom, Johnson & Johnson, and SS&C Technologies. The Motley Fool has a disclosure policy.

5 Best High Dividend Mutual Funds to Buy in 2026

A closer look at some of the top dividend mutual funds for yield-seeking investors.

Key Points

1. Federated Hermes Strategic Value Dividend Fund

Key Data Points

2. Vanguard High Dividend Yield Index Fund Admiral Shares

Key Data Points

3. Vanguard Equity Income Fund Investor Shares

Key Data Points

4. T. Rowe Price Dividend Growth

Key Data Points

5. BlackRock Equity Dividend

Key Data Points

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Dividend mutual fund FAQ

What is the best mutual fund for dividends?

Are dividend mutual funds a good idea?

Which mutual fund is best for monthly dividends?

Which fund has the highest dividend?

Can I reinvest dividends from my mutual funds?

How dividend mutual funds work

Top high-dividend mutual funds to consider

1. Federated Hermes Strategic Value Dividend Fund

2. Vanguard High Dividend Yield Index Fund Admiral Shares

4. T. Rowe Price Dividend Growth

The bottom line

Related investing topics

FAQ

Key Data Points

Key Data Points

Key Data Points

5. BlackRock Equity Dividend

Key Data Points

Key Data Points

3. Vanguard Equity Income Fund Investor Shares

Types of dividend-paying mutual funds

Key factors to consider when choosing a dividend mutual fund