3 Equity Income Funds

Morningstar analysts handpick three equity income funds that have a history of offering decent yields and growth too

Holly Black 13 April, 2021 | 11:34AM
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Equity income funds and investment trusts are a popular choice for investors looking to combine growth and income within their portfolios. These funds invest in dividend-paying stocks, achieving gains as the share price of the companies (hopefully) increase while also enjoying an income from the dividends paid out. Investors in such funds have an option to withdraw the income paid or to wrap it back up into their investment, which can help to further boost returns. Here, we look at a few highly rated options.

Rathbone Income

Morningstar analyst Bhavik Parekh describes the Rathbone Income fund as a “solid choice” for investors who want both long-term growth and a rising income. Many equity income funds were hit hard in 2020 as companies across the board cut their dividends because of the Covid-19 pandemic, but Rathbone Income made only a small cut to its own payout. The fund was upgraded in December from a Bronze to Silver Morningstar Analyst Rating. Manager Carl Stick has been at the helm since 2000 and Morningstar’s Parekh praises his ability to “identify quality companies with healthy dividend yields that can grow their payouts by at least the rate of inflation each year”.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Holly Black  is Senior Editor, Morningstar.co.uk