Morningstar homed in on domestic-equity-income funds that fit the bill. We started by screening the domestic-equity universe for no-load offerings whose trailing 12-month yields were higher than that of the S&P 500 Index. And while investors should always be mindful of fees, costs are an especially crucial consideration for investors seeking income since fees can easily hack away at a fund’s yield. To maximize net income, we sought fees lower than 1%. We also restricted bond and “other” (mainly convertibles and preferreds) exposure to less than 5% of the portfolio by filtering out any funds whose bond holdings had a significant effect on the funds’ high-yield figures.
Additionally only Morningstar Ratings of 3 stars or higher as well as managers whose tenures extend beyond five years were used. And to further streamline our results, we called up distinct portfolios of funds that were open to new investments of $3,000 or less. The screener yielded more than a dozen funds, three of which we highlight below. Premium members can 
click here to replicate this screen.
Investment options of Morningstar Dividend
Investment model portfolios
We provide two types of investment model portfolios for Morningstar Dividend participants. You can customize and follow a model portfolio in your plan account.
Types of portfolio strategies
- Strategic asset allocation portfolio: It invests in a diversified portfolio of multiple assets, buy-and-hold without frequently changing the asset allocation weights.
- Suitable: For long-term (more than 15 years, preferably more than 20 years), want to be tax efficient and can withstand interim drawdown or loss as high as 50% or more.
- Pros:
- Less error-prone
- Infrequent rebalancing or transactions
- Tax efficient for taxable brokerage investments
- Cons:
- Interim loss or drawdown can be substantial
- Possible low returns for an extended period, such as 10 years or longer
- Tactical asset allocation portfolio: it invests in a diversified portfolio of multiple assets, dynamically adjust stock and bond allocations to minimize losses during market stress.
- Suitable: For long-term (more than 10 years or preferably longer) capital. Investors are willing to rebalance as frequent as monthly.
- Pros:
- Reduce large interim loss or drawdown
- Less sensitive to investment entry point
- Likely to improve returns
- Cons
- Demand more frequent rebalancing or transactions
- Less tax efficient — more suitable in a tax-deferred account such as 401(k) or IRA
- Can experience a period of lower returns compared to a broad-based strategic allocation or a buy-and-hold benchmark, especially in some bull markets
These portfolios are proactively monitored and rebalanced on a monthly basis when needed, ensuring it remains in line with its target allocation.
Let us know (Email us) if you need help to create a custom model portfolio for your plan.