Best Dividend Yield Mutual Funds
A dividend yield fund is a form of mutual fund, and it invests mostly in the companies holding the potential to pay regular dividends to its shareholders.
(Meaning of Dividends:- It is a part of the profits that a company distributes to its investors, and a dividend yield is the ratio of the annual dividend for a share to the current share price, expressed in percentage.)
This fund aims at generating income for its investors by investing in high-dividend-yielding stocks. According to SEBI, a dividend yield fund is required to invest at least 65% of its assets in equity and equity-associated instruments. Go through the best dividend yield funds provided below for a better understanding.
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List of Dividend Yield Mutual Funds in India
| Fund Name | Category | Risk | 1Y Returns | Rating | Fund Size(in Cr) |
|---|---|---|---|---|---|
ICICI Prudential Dividend Yield Equity Fund | Equity | Very High | 52.5% | -- | ₹3,716 |
HDFC Dividend Yield Fund | Equity | Very High | 42.7% | -- | ₹4,958 |
Templeton India Equity Income Fund | Equity | Very High | 41.8% | -- | ₹2,158 |
Aditya Birla Sun Life Dividend Yield Fund | Equity | Very High | 46.1% | -- | ₹1,353 |
LIC MFDividend Yield Fund | Equity | Very High | 49.0% | -- | ₹153 |
IDBI Dividend Yield Fund | Equity | Very High | 20.5% | -- | ₹89 |
Sundaram Dividend Yield Fund | Equity | Very High | 40.5% | -- | ₹860 |
UTI Dividend Yield Fund | Equity | Very High | 41.0% | -- | ₹3,702 |
Tata Dividend Yield Fund | Equity | Very High | 40.6% | -- | ₹889 |
SBI Dividend Yield Fund | Equity | Very High | 33.6% | -- | ₹7,343 |
| View All |
Who Should Invest in Dividend Yield Funds?
The investors who can profit the most from investments in the best dividend-yield mutual funds are as follows:
- Investors Looking for a Passive Income Source
This form of the fund is most suitable for investors who are looking for a passive income, given that dividend yield funds offer regular dividend payouts to their investors.
- Investors with Low-Risk Appetite
The risks of dividend yield funds are much less than other forms of equity mutual funds, which makes them low-risk funds and most suitable for investors who have a low-risk appetite.
Estimate your returns on mutual funds investment with SIP calculator. It is an easy-to-use tool that allows investors to assess probable returns on SIP.
Factors to Consider While Investing in Dividend Yield Funds
The major factors to be considered while finding the top dividend yield mutual funds and investing in them are-
- Risk Tolerance
If you are a traditional investor who prioritises portfolio stability, you should search for funds that have a higher allocation to large-cap equities. This is because your primary goal is to reduce risk by investing in a program with low hazards.
- Investment Tenures
Like with other mutual funds, it is critical to look into the duration of the fund's investment tenure. A dividend yield fund that has seen the stock market's bull and bear phases will provide a higher return than newer companies.
Furthermore, newly launched companies advertising funds may perform well while markets are high, but to secure long-term benefits, investors should review the fund's tenure and performance across market cycles.
Major Advantages
Investors can reap these benefits by investing in the best dividend yield mutual funds:
- Equity exposure with lower risk: Dividend yield mutual funds are relatively less impacted by market volatility than other equity-oriented MF schemes. Hence, investors who are seeking equity exposure and higher returns than fixed-income instruments, such as bank fixed deposits, can benefit from schemes of this sort.
- High returns over a long term: Since dividend yield funds invest in shares of companies that have strong financials and a proven track record, they have the potential to generate high returns in future.
- Regular income: Since underlying companies in these schemes declare regular dividends, MFs can be an appropriate option for investors seeking regular income and stability.
Investment routes: Investors can allocate their funds to these schemes via two routes – lump-sum and a Systematic Investment Plan (SIP). The first option allows an individual to invest the entire amount at once. By taking the SIP route, investors can allocate their savings to the best dividend yield mutual funds at fixed intervals, such as monthly, quarterly, or yearly.
Risks Involved While Investing in Dividend Yield Funds
While finding the best dividend yield mutual funds, ensure to go through the below-mentioned risks-
- Inherent Risks of Mutual Funds
The inherent risks of mutual funds include liquidity risk, credit risk, market risk, concentration risk, and more. These risks are present in the case of dividend yield funds, too.
- Greater Taxes
The government has shifted the tax incidence of dividend income; therefore, this factor increases the taxes associated with dividend yields.
- Returns Vary Based on Performance
These funds are less volatile since the fund's underlying investments are affected by market swings less. There is no denying, however, that the returns are subject to market risk and cannot be guaranteed.
FAQs
Q1. How does a dividend yield fund work?
The dividend yield funds' primary goal is to pay out monthly dividends to investors. The fund manager does this by investing mostly in securities of companies with the potential to provide regular payouts.
Q2. Are dividend yield funds a good investment?
If you are looking forward to lowering your risks and volatility as investors, you can invest in dividend mutual funds. However, if you are an aggressive growth seeker, you can add it to the investment portfolio.
Q3. What is dividend yield?
The dividend yield is the amount of dividend paid per unit or per share divided by the market price of such shares.
Q4. Is there an exit load for dividend yield funds?
When you sell mutual fund units, you will normally be charged an exit load. The percentage of exit burden is determined by the scheme's parameters.
Q5. Can the dividends declared by the underlying company be re-invested in the fund?
Yes, it can be reinvested. But it is also based on the guidelines and type of fund at the fund manager's discretion.
Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
Let's have a closer look
Now let us jump and check about these top 10 mutual fund schemes.
ICICI Prudential Dividend Yield Equity Fund Direct Growth
Fund Performance: The ICICI Prudential Dividend Yield Equity Fund has given 31.21% annualized returns in the past three years and 24.63% in the last 5 years. The ICICI Prudential Dividend Yield Equity Fund comes under the Equity category of ICICI Prudential Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in ICICI Prudential Dividend Yield Equity Fund via lump sum is ₹5,000 and via SIP is ₹100.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹3,716Cr |
| 1Y Returns | 52.5% |
HDFC Dividend Yield Fund Direct Growth
Fund Performance: The HDFC Dividend Yield Fund comes under the Equity category of HDFC Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in HDFC Dividend Yield Fund via lump sum is ₹100 and via SIP is ₹100.
| Min Investment Amt | ₹100 |
|---|---|
| AUM | ₹4,958Cr |
| 1Y Returns | 42.7% |
Templeton India Equity Income Direct Plan Growth
Fund Performance: The Templeton India Equity Income Fund has given 25.24% annualized returns in the past three years and 23.8% in the last 5 years. The Templeton India Equity Income Fund comes under the Equity category of Franklin Templeton Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Templeton India Equity Income Fund via lump sum is ₹5,000 and via SIP is ₹500.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹2,158Cr |
| 1Y Returns | 41.8% |
Aditya Birla Sun Life Dividend Yield Fund Direct Growth
Fund Performance: The Aditya Birla Sun Life Dividend Yield Fund has given 24.88% annualized returns in the past three years and 22.17% in the last 5 years. The Aditya Birla Sun Life Dividend Yield Fund comes under the Equity category of Aditya Birla Sun Life Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Aditya Birla Sun Life Dividend Yield Fund via lump sum is ₹1,000 and via SIP is ₹100.
| Min Investment Amt | ₹1,000 |
|---|---|
| AUM | ₹1,353Cr |
| 1Y Returns | 46.1% |
LIC MFDividend Yield Fund Direct Growth
Fund Performance: The LIC MFDividend Yield Fund has given 23.01% annualized returns in the past three years and 22.68% in the last 5 years. The LIC MFDividend Yield Fund comes under the Equity category of LIC Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in LIC MFDividend Yield Fund via lump sum is ₹5,000 and via SIP is ₹1,000.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹153Cr |
| 1Y Returns | 49.0% |
IDBI Dividend Yield Fund Direct Growth
Fund Performance: The IDBI Dividend Yield Fund comes under the Equity category of IDBI Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in IDBI Dividend Yield Fund via lump sum is ₹5,000 and via SIP is ₹500.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹89Cr |
| 1Y Returns | 20.5% |
Sundaram Dividend Yield Fund Direct Growth
Fund Performance: The Sundaram Dividend Yield Fund has given 21.03% annualized returns in the past three years and 20.31% in the last 5 years. The Sundaram Dividend Yield Fund comes under the Equity category of Sundaram Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Sundaram Dividend Yield Fund via lump sum is ₹5,000 and via SIP is ₹500.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹860Cr |
| 1Y Returns | 40.5% |
UTI Dividend Yield Fund Direct Growth
Fund Performance: The UTI Dividend Yield Fund has given 19.86% annualized returns in the past three years and 19.69% in the last 5 years. The UTI Dividend Yield Fund comes under the Equity category of UTI Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in UTI Dividend Yield Fund via lump sum is ₹5,000 and via SIP is ₹500.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹3,702Cr |
| 1Y Returns | 41.0% |
Tata Dividend Yield Fund Direct Growth
Fund Performance: The Tata Dividend Yield Fund has given 9.08% annualized returns in the past three years and 16.72% in the last 5 years. The Tata Dividend Yield Fund comes under the Equity category of Tata Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Tata Dividend Yield Fund via lump sum is ₹5,000 and via SIP is ₹100.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹889Cr |
| 1Y Returns | 40.6% |
SBI Dividend Yield Fund Direct Growth
Fund Performance: The SBI Dividend Yield Fund comes under the Equity category of SBI Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in SBI Dividend Yield Fund via lump sum is ₹5,000 and via SIP is ₹500.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹7,343Cr |
| 1Y Returns | 33.6% |
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