Chet Currier writes in Contra Costa Times writes that it might be worth considering investing in dividend-growth funds.

Dividend-growth funds normally hold well-established companies offering dividends of 6, 8, or 10 percent or more. They however require investors to be committed to holding them for the long-term when you benefit by receiving good dividend payments.

There are over 60 of these types of funds ranging from well established ones such as the $2.8 billion Franklin Rising Dividends Fund to the new Vanguard High Dividend Yield Index Fund which was started just this month.

For an example of how this works, let us take the stock, General Electric. General Electric is one of the 10 largest holdings that Frankling Rising Dividends Fund has in its portfolio. According to Bloomberg, it has a current quarterly dividend of 25 cents. This provides an annual yield of about 2.8 percent at a recent stock price of 36 dollars.

Although 2.8 looks like a small return on investment, General Electric has regularly raised its dividends. And this has enabled the dividends it pays out to grow at a rate of 9.4 percent over the past 5 years. At this rate, if the dividend keeps growing at 9 percent annually, it will double in value every 8 years.

Source : ContraCostaTimes.com