BOSTON (TheStreet) -- Investors, ravenous for reliable returns given the sketchy economic outlook, are gobbling up dividend stocks and dividend-focused mutual funds this year. That means high-yielding shares may continue to rise.
Indicative of investors' current interest in yield, both bond and dividend-focused equity mutual funds are being flooded with cash, while other fund categories are suffering outflows.
This year through April 25, dividend-focused stock funds had inflows of $17.3 billion, resulting in total net inflows of $1.1 billion for all types of mutual funds, which means other categories of stock funds had outflows of $18.4 billion, according to fund tracker EPFR Global.
"We've been seeing a tremendous search for yield, given that interest rates have been so low," said Cameron Brandt, director of research at EPFR. Most investors have been buying bond funds, but those looking to get potentially higher total returns are going with dividend-focused stock funds, he told TheStreet. With that in mind, I screened the SPDR S&P Dividend ETF (SDY), an exchange traded fund that tracks the S&P High Yield Dividend Aristocrats Index -- which is made up of the 60 highest-yielding stocks of the S&P 1500 that have also raised their dividends every year for the past 25 years -- for the 10 stocks with the best share-price returns so far in 2012. This group of stocks should give their investors the best of both worlds: high-quality companies -- since they have solid, sustainable business models -- coupled with potentially good share-price returns. But there are no home run returns to be had here, as big steady dividends are their chief appeal and share-price appreciation comes secondary, hence Wall Street analysts' middling ratings. The biggest dividend payer in the group, insurance underwriter Old Republic International (ORI), has a yield of 7.4%, while the biggest share-price return is that of another insurer, Cincinatti Financial (CINF), with a 19.5% total return (which includes dividends). Its shares carry a hefty 4.4% dividend yield. The S&P 500's total return is 12.5% this year, including a 2% dividend yield. Here are 10 stocks of the 60 S&P dividend aristocrats with the best total returns ranked in inverse order of year-to-date gain:
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