This fund has a five-year return of 14.47%, a Y-T-D return of 7.6% and currently pays a dividend yield of 1.35%.
Fidelity Dividend Growth (FDGFX)
from MoneyLetter
Over the past year, Fidelity Dividend Growth (FDGFX) has been a fund in transition.
Ramona Persaud replaced Larry Rakers as the fund’s manager as of the first of this year, and beginning last October, the two worked together to reshape the portfolio. Under Rakers, who began managing in September 2008, the fund portfolio contained 400 to 500 stocks in all capitalization ranges. Rakers kept sector weightings near that of the S&P 500, but his emphasis on value stocks led to more cyclically-oriented fare in the portfolio. That, combined with a higher exposure to mid- and small-stocks compared to the fund’s peers, led to greater performance volatility (and a worse performance in down markets) versus others in the large blend Morningstar category. That said, the fund outpaced most of its peers during Rakers’ tenure.
Under Persaud, Dividend Growth’s portfolio has been trimmed to about 130 holdings, with a lower turnover rate, and 23% of assets in the top ten holdings. The fund now also tends to hold larger and more concentrated positions. “The fund’s repositioning has resulted in a higher quality, lower-risk, dividend-oriented portfolio, with a goal of reasonable up-market capture over time, but also with downside protection, an important consideration in stock selection,” notes Fidelity.
Persaud uses a bottom-up stock selection process, with an emphasis on purchasing quality stocks at reasonable valuations. Stocks generally fall into one of three situations: classic dividend growers (high quality), accelerating cash return (firm building a history of dividend growth), and opportunistic (special situations, temporary mispricings).
Strong picks in technology and health care have helped propel the fund this year (up 7.7% through October 3). Apple and Microsoft have been standouts in the former, both advancing about 25%. Health care winners include Johnson & Johnson, Amgen, Merck, and Covidien (which will be acquired by Medtronic).
Minimum Investment $2,500/2,500 IRA.
Walter Frank, Moneyletter, www.moneyletter.com, 800-890-9670, October 2014