Dividends are back, according to the Wall Street Journal's Fund Track. In Tuesday's column, the WSJ says that dividend-paying stocks and mutual funds and exchange-traded funds that own them have come out of the dark period of Q1 2009.

"The climate is very positive for dividend stocks," Harry Domash, publisher of DividendDetective.com, said in the article. "A year or so ago, it was about finding stocks that weren't going to cut their dividend and go out of business; now it's about finding high-yielding stocks in good sectors."

Incorporating the risk and cost of dividends is important when using them in a mutual fund portfolio. The WSJ, using Morningstar tools, found the top "diversified U.S. stock funds that sport 12-month trailing yields of 2 percent or better, with below-category-average risk and expenses."

The top five retail funds on a yield basis were the Vanguard Equity-Income, Vanguard Dividend Growth, American Funds American Mutual, ING Corporate Leaders Trust Series B, and the State Farm Growth.

The top ETFs were the iShares Dow Jones Select Dividend Index, WisdomTree SmallCap Dividend, SPDR S&P Dividend, Vanguard High Dividend Yield Index ETF and WisdomTree MidCap Dividend.

The WSJ also spoke to Josh Peters, editor of the Morningstar DividendInvestor newsletter, who warned, "a dividend is not going to make a bad business into a good stock."  

Edited by: Daniel Tovrov


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