Recent claims that stocks have reached the euphoria stage probably seem a bit out of touch to a lot of investors. While the market is at record highs and the bulls have mostly had their way for five or six years, I suspect many — maybe even most — investors are anything but euphoric.

#-ad_banner-#That’s because there’s nothing to warrant euphoria — and investors know it.

For instance, they’re well aware that not a whole lot has been done about the issues underlying the 2008 financial crisis. And the current recovery, while certainly a step up, is a big disappointment because millions of people have had to settle for lower-paying jobs and an eroding standard of living.

For reasons like these, most investors remain deeply skeptical of stocks and the economy, in my view. And I think most know full well this market is loaded with risk.

Still, the long-term outlook for stocks is very promising because so many companies have the resources, vision and market leadership necessary to prosper on a global scale over time. The key nowadays is knowing how best to gain exposure to them while minimizing risk.

Of course, you could essentially run your own mini mutual fund by doing all your own research and picking all your own stocks. And that’s perfectly fine… if you’ve got the time and inclination.

But you don’t have to do it that way. There are some great funds with long histories of successful stock-picking and competitive returns but well-below-average risk and well-above-market yields.

One of the best you can get your hands on: Cullen High Dividend Equity (Nasdaq: CHDEX).

This leading large-cap fund is run by one of the most experienced stock-pickers in the business — five-decade veteran James P. Cullen, who started his investing career back in the 1960s and co-founded Shafer Cullen Capital Management in 1983. Because of his dividend-focused, value-oriented approach, CHDEX is significantly less volatile than the overall stock market, typically by 30% during the past five years.

What’s more, the fund has long been an excellent dividend payer and currently has an attractive 3.8% yield, compared with the large value category average of 3% and the S&P 500’s paltry 1.8%.

To achieve this, Cullen looks for large, safe stocks with reasonable valuations, especially in terms of the price-to-earnings (P/E) and price-to-book (P/B) ratios. The underlying firms must also have above-average earnings growth prospects because of specific catalysts.

For instance, several factors should facilitate strong earnings growth for the fund’s #1 holding, pharmaceutical giant Merck (NYSE: MRK), which yields 3%.

Among these factors are aggressive cost-control measures and an impressive new-drug pipeline that should garner large profits from the already huge oncology market and the ballooning hepatitis C market. The following table lists CHDEX’s top five holdings with valuations, yields, fund weightings and catalysts for bottom-line growth.

Although three of CHDEX’s top five holdings are drugmakers, the fund isn’t disproportionately tilted toward pharmaceutical or other health care companies. Indeed, several other sectors have comparable fund weightings.

Compared with the large-value category, CHDEX has substantially greater allocations to the consumer defensive, communication services and real estate sectors, where there’s an abundance of less volatile stocks with higher yields. The fund is noticeably underweight in the riskier financial services and consumer cyclical sectors.

CHDEX isn’t typically a market beater, though it does usually deliver competitive long-term total returns relative to the S&P 500. As you can see, the fund’s 10-year record is pretty much neck-and-neck with the market’s.

At 1% of total assets, fund expenses are a little below average. The minimum initial investment is only $1,000.

Risks to Consider: Lead manager James Cullen, who has been running CHDEX since 2003, is getting on in years (he’s in his mid-70s). There’s no guarantee the fund will operate as always after his departure.

Action to Take –> I’m not terribly concerned about the future of CHDEX, despite the age of its lead manager. Cullen has surrounded himself with an experienced, value-oriented team that should be able to run the fund quite capably after he calls it a career.

Clearly, this fund isn’t for you if fast and furious growth is what you’re after. You’ll rarely, if ever, get that from CHDEX. However, it should remain a top choice for investors who’d like a stock fund that can deliver solid long-term returns and above-average yields while keeping a lid on risk. 

If you’re looking to maximize your dividend income, you’ll want to hear about Amy Calistri’s “Daily Paycheck” strategy. By combining three different types of dividend-paying stocks, she’s collecting more than $1,350 a month in dividend checks. And an incredible 91% of the picks in her premium Daily Paycheck advisory are winners. Click here to get the full story.