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.

Dividend mutual funds can make excellent long-term investments. Companies that pay dividends have historically outperformed the S&P 500 with significantly less volatility. That's because the dividend income is a meaningful contributor to a stock's total return (share price appreciation plus dividends).

However, with so many companies paying dividends, it can be challenging to pick the best dividend stocks. That's where dividend mutual funds can help. They allow investors to own a diversified portfolio of dividend-paying stocks.

Here's a closer look at how dividend mutual funds work and some of the top dividend mutual funds to consider.

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How dividend mutual funds work

A mutual fund pools investor capital into a single investment vehicle. Here are a few notable characteristics of the way dividend mutual funds work:

Investment mandate: Mutual funds invest the capital they receive from investors in stocks, bonds, or other assets in line with their stated mandate. For example, as the name implies, a dividend mutual fund invests in a diversified portfolio of dividend-paying stocks. That gives the fund income to pay dividends to its investors, who can use the cash as they see fit, including reinvesting their dividends to buy more shares of the mutual fund.
Fund types: There are two types of dividend mutual funds -- passively or actively managed. Passively managed dividend mutual funds are index funds that aim to track a particular dividend-related index. Meanwhile, actively managed dividend mutual funds buy and sell the top dividend stocks, striving to outperform a specific index.
Expense ratio: Whether active or passive, mutual funds charge their investors a management fee known as the expense ratio. Passively managed mutual funds usually have a lower expense ratio than actively managed funds. As a result, these mutual funds pay a higher percentage of their dividend income to investors than actively managed funds do.

With these factors in mind, here's a closer look at some of the top dividend mutual funds.

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Top high-dividend mutual funds to consider

Some mutual funds focus on owning stocks that pay dividends, especially those with high dividend yields. Funds geared toward this strategy usually make more frequent distributions, typically quarterly or, in some cases, monthly. We focused our dividend mutual fund search on those offering above-average yields or targeting companies known for delivering dividend growth.

Five standout dividend yield-focused mutual funds are:

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1. Federated Hermes Strategic Value Dividend Fund

NASDAQMUTFUND: SVAAX

Federated Hermes Equity Funds - Federated Hermes Strategic Value Dividend Fund

Today's Change

(0.59%) $0.04

Current Price

$6.84

Key Data Points

Day's Range

$6.84 - $6.84

52wk Range

$6.84 - $6.84

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The Federated Hermes Strategic Value Dividend Fund (SVAA.X +0.59%) 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 +0.90%)
Chevron (CVX +2.29%)
British American Tobacco (BTI -2.41%)
U.S. Bancorp (USB -0.56%)
Sanofi (SNY -0.37%)

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

NASDAQMUTFUND: VHYAX

Vanguard Whitehall Funds - Vanguard High Dividend Yield ETF

Today's Change

(1.07%) $0.50

Current Price

$47.42

Key Data Points

Day's Range

$47.42 - $47.42

52wk Range

$47.42 - $47.42

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The Vanguard High Dividend Yield Index Fund (VHYA.X +1.07%) 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 -3.26%)
JPMorgan Chase (JPM -0.65%)
ExxonMobil (XOM +4.07%)
Johnson & Johnson (JNJ -1.72%)
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 (ETF), ( ), with a slightly lower expense ratio (0.06%) and a low minimum investment of one share (around $150 as of mid-2026).

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NASDAQMUTFUND: VEIPX

Vanguard Fenway Funds - Vanguard Equity Income Fund

Today's Change

(0.96%) $0.45

Current Price

$47.21

Key Data Points

Day's Range

$47.21 - $47.21

52wk Range

$47.21 - $47.21

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The Vanguard Equity Income Fund (VEIP.X +0.96%) 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 -1.82%)
JPMorgan Chase
Bank of America (BAC -0.17%)
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

NASDAQMUTFUND: PRDGX

T. Rowe Price Dividend Growth Fund, Inc.

Today's Change

(0.84%) $0.72

Current Price

$86.13

Key Data Points

Day's Range

$86.13 - $86.13

52wk Range

$86.13 - $86.13

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The T. Rowe Price Dividend Growth Fund (PRDG.X +0.84%) 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 +0.68%)
Microsoft (MSFT +3.04%)
Broadcom
JPMorgan Chase
Visa (V +1.00%)

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 -0.54%) 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

(0.54%) $0.12

Current Price

$22.34

Key Data Points

Day's Range

$22.34 - $22.34

52wk Range

$22.34 - $22.34

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The bottom line

Investors seeking passive income can use dividend mutual funds to achieve that goal. The strategy allows investors to own a diversified portfolio of higher-yielding, dividend-paying stocks, which should help lower their risk. Although there are many dividend mutual funds, the Federated Hermes Strategic Value Dividend Fund, Vanguard High Dividend Yield Index Fund, Vanguard Equity Income Fund, BlackRock Equity Dividend Fund, and T. Rowe Price Dividend Growth Fund stand out as the top options for people seeking an attractive income stream.

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FAQ

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

How dividend mutual funds work

Top high-dividend mutual funds to consider

1. Federated Hermes Strategic Value Dividend Fund

Key Data Points

2. Vanguard High Dividend Yield Index Fund Admiral Shares

Key Data Points

Key Data Points

4. T. Rowe Price Dividend Growth

Key Data Points

5. BlackRock Equity Dividend

Key Data Points

The bottom line

Related investing topics

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Best Mutual Funds to Invest In (2026)

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FAQ

Dividend mutual fund FAQ

What is the best mutual fund for dividends?

What is the best mutual fund for dividends?

Are dividend mutual funds a good idea?

Are dividend mutual funds a good idea?

Which mutual fund is best for monthly dividends?

Which mutual fund is best for monthly dividends?

Which fund has the highest dividend?

Which fund has the highest dividend?

Can I reinvest dividends from my mutual funds?

Can I reinvest dividends from my mutual funds?

About the Author

Read Next

Stocks Mentioned

Premium Investing Services

How dividend mutual funds work

Top high-dividend mutual funds to consider

Key Data Points

Key Data Points

Key Data Points

Key Data Points

5. BlackRock Equity Dividend

Key Data Points

The bottom line

How to Invest in Mutual Funds: A Complete Guide

Best Mutual Funds to Invest In (2026)

9 Best Dividend Stocks to Buy and Hold for May 2026

How Are Dividends Taxed? 2025 and 2026 Dividend Tax Rates

Dividend mutual fund FAQ

What is the best mutual fund for dividends?

What is the best mutual fund for dividends?

Are dividend mutual funds a good idea?

Are dividend mutual funds a good idea?

Which mutual fund is best for monthly dividends?

Which mutual fund is best for monthly dividends?

Which fund has the highest dividend?

Which fund has the highest dividend?

Can I reinvest dividends from my mutual funds?

Can I reinvest dividends from my mutual funds?

Types of dividend-paying mutual funds

Key factors to consider when choosing a dividend mutual fund

3. Vanguard Equity Income Fund Investor Shares