3 Dividend-Paying Energy Mutual Funds

The global energy market is an integral part of the global economy. Here, we profile three energy-focused mutual funds that not charge a sales load and also pay dividends.

They are the Vanguard Energy Fund Investor Shares (VGENX), the Fidelity Select Natural Gas Fund (FSNGX), and the Guinness Atkinson Global Energy Fund (GAGEX).

Key Takeaways

• The global energy market one of the most integral parts of the global economy and many mutual funds cover the industry—though only some pay dividends.
• Three energy-focused mutual funds that pay dividends are the Vanguard Energy Fund Investor Shares (VGENX), the Fidelity Select Natural Gas Fund (FSNGX), and the Guinness Atkinson Global Energy Fund (GAGEX).
• The three funds are neither the only funds that cover the energy sector, nor are they the only energy-focused funds that pay dividends, but they are some of the largest that meet the criteria.

1. Vanguard Energy Fund Investor Shares

The Vanguard Energy Fund Investor Shares (VGENX) is an actively managed fund that offers exposure to companies engaged in the energy business. This includes companies involved with the production and transmission of energy, manufacturing component products, energy research, and investing in energy conservation and pollution control. Although the fund focuses on energy companies in the U.S. and abroad, up to 100% of its assets may be held in foreign holdings.

As of late August 2024, the Vanguard Energy Fund held 44 positions representing $5.9 billion in assets. The utilities sector accounted for 43.60% of holdings, followed by integrated oil and gas companies at 33.40%. Foreign holdings represented 37.5% of the fund’s assets.

This mutual fund has an expense ratio of 0.44%. The minimum investment is $3,000. As of late September 2024, the 30-day SEC yield for the Vanguard Energy Fund was 3.19%.

2. Fidelity Select Energy Portfolio

The Fidelity Select Energy Portfolio (FSENX) focuses on capital appreciation and invests in companies engaged in the exploration, production, transmission, and distribution of natural gas. This also includes companies that provide services and equipment to natural gas producers, refineries, cogeneration facilities, converters, and distributors. Normally, at least 80% of fund assets will be invested in the common stock of these types of businesses.

As of late September 2024, the Fidelity Select Natural Gas Portfolio held 44 positions representing just $2.04 billion in assets. Storage & Transportation and Exploration & Production each represented about 30% of the fund’s assets. Equipment & Services took up 12.40%. Its holdings were primarily concentrated in the U.S. at 85.39%, followed by Canada at nearly 13.42%.

This mutual fund has an expense ratio of 0.68%. There are no investment minimums.

3. Guinness Atkinson Global Energy Fund

The Guinness Atkinson Global Energy Fund (GAGEX) seeks long-term capital appreciation by investing in companies engaged in the exploration, production, and distribution of oil, gas, and other energy sources. Fund managers look to macro data such as economic indicators and commodity prices to determine asset allocation. It then screens for companies based on valuation, quality, sentiment, and momentum. The fund has the MSCI World Energy Index as its benchmark.

As of late August 2024, the Guinness Atkinson Global Energy Fund held 32 positions representing $11.3 million in assets. The Oil & Gas sector accounted for 99.73% of the fund’s holdings. The U.S. and Canada accounted for 43.79% and 18.18% of assets, respectively.

This fund has a net expense ratio of 1.47%. The minimum investment is $1,000 for Individual Retirement Accounts and $5,000 for other accounts. Subsequent investments must be at least $250.

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