Dividend rates on mutual funds depend on the investments held by the fund. A properly diversified income portfolio includes mutual funds that invest in real estate and overseas interests, according to Kiplinger, a publisher of business forecasts and personal financial advice.
Investment in mutual funds is one way to take advantage of overall stock market performance while avoiding individual stock volatility, explains Kiplinger. Dividend-paying mutual funds with diversified investments include T. Rowe Price Real Estate Fund, Vanguard Dividend Growth Fund and Harbor International Fund Investor. In June 2014, the T.Rowe Price Real Estate Fund, with a 10-year return of 9.9 percent, held real estate investments in locations with strong demand and limited supply, ignoring data servers and health care properties. The Vanguard Dividend Growth Fund held investments in large-cap stocks, United Parcel and McDonald's, as well as BG Group, a U.K. liquefied natural gas shipper. The fund had a 10-year annualized return of 9.1 percent. The Harbor International Fund held investments in European drug stocks with a 10-year return of 9.9 percent.
According to Jesper Madsen, lead manager for Matthews Asian Dividend Fund, many Asian companies are family owned and pay dividends to share company income with family members who are also investors. Different cultural attitudes toward finance are another benefit of diversified investments in dividend-paying mutual funds, states Kiplinger.