• Mike Morey, who runs the Integrity Dividend Harvest Fund, is booming this year.
  • Income-oriented investing has come back into vogue as inflation rises and the risk of recession increases.
  • Here are seven dividend-paying stocks that should hold up well in an economic downturn.

As the cost of living rises at the fastest rate in more than 40 years, investors are increasingly turning to dividend-paying stocks in their search for income.

This has helped funds like the Integrity Dividend Harvest Fund (IDIVX) come back into favor after being beaten for years by growth stocks. In fact, the income-focused fund managed by portfolio managers Mike Morey, Shannon Radke, Joshua Larson and Trey Welsta has outperformed 96% of competitors this year, according to Morningstar.

But what’s even more impressive is that the Integrity Dividend Harvest fund is currently Kiplinger’s second largest large-cap fund, based on its total return of 9.1% over the past year, as of June 30. . For reference, the S&P 500 was down 12.4%. in the same 12 month period. Additionally, the mutual fund has a dividend yield of 3.1%, nearly double the 1.6% yield of the S&P 500.

In a recent interview with Insider, Morey, who is also chief investment officer for Integrity Viking Funds, talked about his fund’s strategy and some of his favorite stocks. The chief investment officer said the key to his fund’s drastic outperformance over the past year was its focus on quality stocks that offer high and reliable dividend payouts in any market environment.

“Our fund generates significant production during market downturns, and that’s evident on every pullback we’ve had since the fund’s inception,” Morey told Insider. “So where we are in the market cycle doesn’t really affect our process of owning these quality companies with a rich history of paying dividends.”

How to Succeed in Income Investing

There are three simple goals Morey and his fellow portfolio managers are trying to achieve, he said: maximize current income, maximize income growth and minimize risk.

Achieving this trifecta is a challenge. As Daniel Peris, another dividend fund manager, recently noted, many stocks don’t offer attractive dividends – if they have any at all – and those that do tend to have higher growth rates. weak, as continuing to increase an already high dividend becomes more difficult over the years. time. Moreover, companies with high dividends are not necessarily the most financially stable.

Aiming to tick all three boxes, Morey said he was looking for a company with a high current dividend yielda long experience in increasing its dividenda high level of free cash flowa down betaand one stable market capitalization. Sticking closely to this process has allowed the Integrity Dividend Harvest Fund to increase its own dividend yield every year since its inception in 2012, the portfolio manager said.

Morey’s fund is fairly diversified across all sectors, the portfolio manager said, although there are a few groups he believes have a particularly large weighting: basic consumption, utilities, Health care, Technology, energyand finance. The first four are defensive in nature while the last two are more cyclical, which helps Morey’s fund succeed in any market environment. This is especially relevant if the United States is heading into a recession, as many experts have predicted.

7 Highest Dividend Stocks

Of the 53 stocks in Morey’s fund, seven names stand out, according to the portfolio manager. Below is the case Morey presented for each company, along with its symbol and market capitalization.