Fidelity Trio for Growth and Income

12/11/2013 9:00 am EST

Focus: STOCKS

Jim Lowell

Senior Partner & Chief Investment Strategist, Adviser Investments

I think the right place to be now, and over the next ten years, will generally be in equities, explains Jim Lowell. In his Fidelity Investor, the fund expert highlights a trio of favorite growth and income funds.

To combine equities with reliable income, you need to be selective and flexible. I favor the following three funds; they offer a strategic kind of dividend paying approach to the equity market.

Growth & Income (US:FGRIX)

Manager Matthew Fruhan invests mostly in stocks that pay dividends and show a potential for growth. It began trading in December 1985 and has a market value of over $6.2 billion.

Foreign investments make up 12% of the holdings. The top three sectors are financials (18.9%), information technology (17.8%), and health care (12.9%).

The top ten holdings are JPMorgan, Apple, GE, Microsoft, Chevron, Wells Fargo, Occidental Petroleum, Citigroup, Proctor & Gamble, and Merck. The fund yields 1.73%.

Equity-Income (US:FEQIX)

Lead manager James Morrow invests mostly in dividend paying stocks, which leads to value tilt. Value stocks are defined by a mispricing of fundamentals (which can be anything form earnings to dividends) and current price.

It began trading in May 1966 and has a market value of over $7.2 billion. Foreign investments make up 12.8% of the holdings; in a global marketplace, value knows no boundaries.

The top three sectors are financials (20.9%), energy (13.3%), and healthcare (12.8%).

The top ten holdings are JPMorgan, Chevron, Wells Fargo, Johnson & Johnson, GE, Cisco Systems, Exxon Mobil, MetLife, Paychex, and Merck. The fund yields 2.24%.

Equity Dividend Income (US:FEQTX)

Manager Scott Offen also invests in dividend paying stocks, giving this fund a large-cap value tilt. It began trading in August 1990 and has a market value of $4.9 billion.

Foreign investments make up 13.9% of the holdings. The top three sectors are financials (20.9%), energy (13.8%), and healthcare (13.5%).

The top ten holdings are Chevron, GE, Wells Fargo, JPMorgan, Proctor & Gamble, Cisco Systems, ConocoPhillips, Johnson & Johnson, Exxon Mobil, and Merck. The fund yields 2.02%.

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