What is a dividend growth fund?


Quick Answer

A dividend growth fund is a fund whose focus is on growth rather than dividend yield. These types of funds can trump typical funds that prioritize yield because they tend to have better margins and more stability during times of economic downturn, according to Barron's.

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Full Answer

Dividend growth funds target consistent and sustainable increases in dividend payouts over several years. Some dividend growth funds also present investors with the option to forego receiving dividends in order to reinvest the money back into the fund, according to Investopedia. This retains the number of shares an investor holds but increases the value of each one, resulting in a higher capital gain in the future.

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