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Dividend Yield Mutual Funds

Dividend Yield Funds invest at least 65% of their portfolio in equities such that the stocks reward shareholders with high and consistent dividend payouts, bonus shares or share buybacks. These funds can have a value tilt, they can be a blend of growth and value, or they may be growth-oriented. View More

The aim of these funds is to provide medium to long term gains and/or dividend distribution by investing in equity and equity-related instruments of dividend-yielding companies. Dividend Yield Funds with a value tilt invest mainly in stocks that are undervalued and are trading at a market price that is lower than their intrinsic value.

However, the companies that the funds invest in have strong fundamentals, so the market will eventually realise their actual value.

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Dividend Yield Mutual Funds List

Filters
logo ICICI Pru Dividend Yield Equity Fund - Direct Growth

11.86%

Fund Size (Cr.) - 4,575

Invest
logo LIC MF Dividend Yield Fund - Direct Growth

16.83%

Fund Size (Cr.) - 446

Invest
logo Aditya Birla SL Dividend Yield Fund - Direct Growth

7.12%

Fund Size (Cr.) - 1,339

Invest
logo HDFC Dividend Yield Fund - Direct Growth

6.78%

Fund Size (Cr.) - 5,512

Invest
logo Templeton India Equity Income Fund - Direct Growth

7.73%

Fund Size (Cr.) - 2,201

Invest
logo UTI-Dividend Yield Fund - Direct Growth

15.05%

Fund Size (Cr.) - 3,633

Invest
logo Sundaram Dividend Yield Fund - Direct Growth

6.35%

Fund Size (Cr.) - 807

Invest
logo Tata Dividend Yield Fund - Direct Growth

6.17%

Fund Size (Cr.) - 839

Invest
logo SBI Dividend Yield Fund - Direct Growth

6.14%

Fund Size (Cr.) - 8,420

Invest
logo Baroda BNP Paribas Dividend Yield Fund - Dir Growth

-

Fund Size (Cr.) - 899

Invest

Who Should Invest in Dividend Yield Funds?

  • Dividend Yield Funds are good for investors who want a regular income in the form of dividends since the mutual funds pass on the dividends from the companies to the investors. Although Dividend Yield Funds can invest across market capitalisation and sectors, most of these funds invest at least 50% of their assets in large cap companies that are mature and have a healthy cash flow in order to pay dividends.

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  • Dividend Yield Funds are best for moderate risk takers since these funds are relatively less risky as compared to small cap, mid cap and growth-oriented funds. So, during a downturn, they tend to fall less than the aforementioned funds. Investors who don’t want to be affected by volatility can invest in Dividend Yield Funds since the companies the funds invest in are generally capital intensive businesses that are less volatile.
  • Investors who are not confident about picking out dividend yielding stocks on their own can opt for the mutual fund route.
  • The funds provide a high return on investment in the long run. Hence, they are suitable for investors who want to stay invested for at least 5 years.
  • These funds are good for investors who want to avoid a steep tax on dividends. When you invest in stocks that pay dividends, the dividends from stocks are taxed in the hands of the investors at a high marginal tax rate. In the case of the dividend yield funds, the dividends are taxed at a much lower rate.

Popular Dividend Yield Mutual Funds

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 4,575
  • 3Y Return
  • 23.33%

  • Min SIP Investment Amt
  • ₹ ₹ 200
  • AUM (Cr.)
  • ₹ 446
  • 3Y Return
  • 20.13%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 1,339
  • 3Y Return
  • 19.33%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 5,512
  • 3Y Return
  • 19.19%

  • Min SIP Investment Amt
  • ₹ ₹ 500
  • AUM (Cr.)
  • ₹ 2,201
  • 3Y Return
  • 18.59%

  • Min SIP Investment Amt
  • ₹ ₹ 500
  • AUM (Cr.)
  • ₹ 3,633
  • 3Y Return
  • 17.16%

  • Min SIP Investment Amt
  • ₹ ₹ 500
  • AUM (Cr.)
  • ₹ 807
  • 3Y Return
  • 16.50%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 839
  • 3Y Return
  • 15.71%

  • Min SIP Investment Amt
  • ₹ ₹ 500
  • AUM (Cr.)
  • ₹ 8,420
  • 3Y Return
  • -

  • Min SIP Investment Amt
  • ₹ ₹ 500
  • AUM (Cr.)
  • ₹ 899
  • 3Y Return
  • -

FAQs

Most fund houses select ‘High Dividend’ companies by comparing their dividends yield with a benchmark index like Sensex or Nifty 50. For example: If the dividend yield of Nifty 50 currently is near 1.25, a fund house would prefer investing in companies having a dividend yield higher than 1.25.

Most dividend yield funds invest about 75%-80% of their capital in high dividend-paying companies. The remaining corpus is invested in companies’ stocks with high returns potential in the future.

The trick here is to invest in companies with low dividend yields or no-dividend pay that would provide good returns if they are undervalued, provided their fundamentals are strong.

Dividend yield funds are generally stable and are a good investment for those looking for low volatile stocks. These funds are not recommended for aggressive growth-seekers, but they prove to be a good addition to most investment portfolios.

A reasonable dividend yield depends on the market conditions, but an average yield between 2% to 6% is considered ideal.

Mutual fund share prices fall after paying dividends because the money paid as dividends is extracted from the existing assets of the fund.

Dividend Yield funds focus on the dividend yield of stocks. They are appropriate for investors who are looking to invest in equity funds but with a low level of volatility in their investments. These funds are invested in companies that are generally stable and hence are best suited for the following groups of investors/individuals:

  • Low-risk appetite- Investors who do not prefer to take high risks and prefer to let go of better profits without exposing themselves to market risks.
  • Diversified portfolio- Those willing to have an all-around investment and assess risk on a large scale should invest in Dividend Yielding funds, thereby assisting the investor in having a diversified portfolio.
  • First-time investors- These funds provide minimal risk-investment routes for limited periods and are best for those investing for the first time in mutual funds.
  • Short-investment horizon- These funds generate high returns even in short time frames; hence it is a good investment for those who do not want to wait for long spells to gain returns from their investments.
  • Regular income- Investors who are hoping for a regular income from their investments, even though a low one, should consider investing in these funds.

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