TIP SHEET: Goldman Rolls Out Income Fund Targeting 10% Dividend Growth

Goldman Sachs Asset Management rolled out the newly named Goldman Sachs Rising Dividend Growth Fund (GSRAX) on Feb. 27 after completing its acquisition of the mutual fund management business of Dividend Growth Advisors.

The $195 million fund targets 80% of its investments in stocks of U.S. and non-U.S. companies with market capitalizations over $500 million that have increased their dividends 10% a year over 10 years. Stocks of companies that cut their dividends get sold from the fund.

Goldman took over the fund but Dividend Growth Advisors, based in Ridgeland, S.C., will sub-advise.

C. Troy Shaver, the co-manager of the fund and a former chief executive of John Hancock Funds Inc. (JOHNHF.XX), says the investment philosophy is based on what investors would need to do in a high interest rate environment. To protect against inflation, investors would need to invest in dividend stocks that kept pace with it. Of course, the gains also help in a low-rate environment.

Currently the fund is overweighted in industrials and consumer discretionary stocks, including TJX Co.s (TJX), parent of discount retailing chain T.J. Maxx, and Church & Dwight Co. (CHD), maker of household products like Arm & Hammer baking soda and Oxi Clean.

The fund's biggest holding is Denmark-based Novo Nordisk A/S (NVO, NOVO-B.KO), a pharmaceutical company that is the leader in diabetic care products, at 4% of the portfolio. Another top-five holding is McDonald's Corp. (MCD), at 3.7%.

The fund also invests approximately 20% of its assets in 12 oil and gas pipeline projects, called master limited partnerships.

Morningstar dividend fund analyst Christopher Davis doesn't track this particular fund but says dividend investing has been a hot segment. Last year, $3 billion poured into dividend-oriented stock funds, according to Davis.

Companies in this category tend to be high-quality blue chips with sustainable competitive advantages and growing profitability, Davis noted. And they are shareholder-friendly, "all good attributes."

As of March 1, the fund was up 6.1% year-to-date, 6.91% over one year and 5.41% over five years, according to investment site Morningstar.com.

Goldman acquired the business to fill in a gap in its roster of mutual fund offerings, the firm said in December when the deal was announced.

-By Liz Moyer, Dow Jones Newswires; 212-416-2512; [e-mail]

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