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Best Dividend Paying Mutual Funds

What is Dividend Paying Mutual Funds?

These are mutual funds that mostly invest in organizations that offer dividends. And Dividends, in turn, refer to the profit or revenue are earned by companies and get shared with the shareholders of the company. These profits are the returns that mutual funds get by selling the shares at higher prices than purchased for. Also, depending on the scheme, fund managers can either use the profits to purchase stocks or declare a dividend.

You can truly enjoy predictable returns when you invest in a debt mutual fund. However, in case you invest in an equity-linked fund, your returns will be very volatile in nature. But when you choose an equity-linked fund that offers dividends, you can enjoy maximum profit which results in magnificent growth for your funds.

When are Dividends paid to the Investors

An Asset Management company or a company that manages assets can choose to pay dividends daily, monthly, quarterly or annually. But, this can vary from one scheme to another. Even if most of the dividend mutual funds attempt to pay dividends and stick to their respective mandate, it is never guaranteed. Also, the amount is not a fixed one. However, it is imperative for an investor to understand that under the dividend option, the Net Asset Value is not allowed to grow higher. Therefore, as soon as the Net Value reaches a specific level, the fund house will choose to pay the dividends.

How Do Dividend-Paying Mutual Funds Work?

With Dividend paying mutual funds, investors are provided with annualized payouts. The payouts will be made on a regular basis and therefore as an investor you feel safe and secure with these funds. Also, these dividends will be paid from the revenues earned by the fund during the previous year. Since the dividends are paid out on reaching a specific level, most of the mutual funds with the dividend will not show high growth in their Net Asset Value (NAV).

Note: Dividend mutual funds are apt for investors who do not have an appetite for risk and who wish to receive regular payouts as a source of income.

Tax Implications of Dividend Mutual Funds

Dividends from each and every mutual fund are tax-free in the hands of investors. However, a dividend distribution tax (DDT) of 28.84% for debt funds are paid by fund houses and includes surcharge and cess. Contrarily, there is no dividend distribution tax in an equity mutual fund.

The dividend option is a well-suited option for investors who do not incline towards taking a risk in investments and also for those who need a cash flow. Depending on his/her investment goals, an investor can opt for growth or dividend option. Therefore, people who are generally keen to grow their wealth over a long term, usually opt for growth option.

Best Dividend-Paying Mutual Funds

Franklin India Opportunities Fund (D)

The main objective of this scheme is to generate capital appreciation by capitalizing on the long-term growth opportunities in the India economy. This scheme aims at investing in a broad range of stocks without any limitation, either qualitative or quantitative and across market capitalization.

PeriodReturns(%) (NAV as on Jul 09, 2018) Rank
1 Month-197
3 Month-0.885
6 Month-7115
1 Year7.386
2 Year11.8145
3 Year8.4140
5 Year18.577

Aditya Birla Sun Life Frontline Equity Fund (D)

The scheme aims at a long term growth of capital through a portfolio with a target allocation of 100% equity by aiming at being diversified across various industries

PeriodReturns(%) (NAV as on Jul 09, 2018) rank
1 Month-0.6 -
3 Months-0.6-
6 Months-4.1-
1 Year-4.1-
2 Year12.6-
3 Year9.7-
5 Year17.1-

Aditya Birla Sun Life Dividend Yield Plus

The main objective of this fund is to provide capital growth and income by investing primarily in a well-diversified portfolio of dividend paying companies that have a relatively high dividend yield

PeriodReturns(%) (NAV as on Jul 09, 2018) Rank
1 Month-3201
3 Month-4.6187
6 Month-12.4183
1 Year-1.5189
2 Year9.8181
3 Year6.2177
5 Year14.8116

ICICI Prudential Dividend Yield Equity Fund

The main objective of this scheme is to provide medium to long term capital gains and dividend distribution by investing in a well- diversified portfolio of predominantly equity and equity related instruments, which offer attractive dividend yield.

PeriodReturns (%) (NAV as on Jul 09, 2018) rank
1 Month-2.4167
3 Months-4.1170
6 Months-10.8171
1 Year-0.3182
2 Year14.589
3 Year11.866
5 Year--

Principal Dividend Yield Fund – Growth

The objective of this fund is to provide capital appreciation by investing predominantly in a well-diversified portfolio of companies that have a relatively high dividend yield.

PeriodReturns (%) (NAV as on Jul 09, 2018) Rank
1 Month-0.582
3 Months0.845
6 Months-5.592
1 Year13.720
2 Year20.613
3 Year13.734
5 Years18.184

L & T Emerging Businesses Fund - Direct Plan (D)

This scheme will mainly be a diversified equity fund which will invest predominantly in small cap stocks to generate long term capital appreciation.

PeriodReturns (%) (NAV as on Jul 09, 2018) Rank
1 Month-2.5-
3 Month-6.4--
6 Month-12-
1 Year8.5-
2 Year26.9-
3 Year23.2-
5 Year--

UTI Dividend Yield Fund – Growth

The UTI Dividend Yield Fund aims to generate long term capital appreciation and income by investing predominantly in dividend yielding equity and equity related securities.

PeriodReturns (%) (NAV as on Jul 09, 2018)rank
1 Month-2.4169
3 Months-0.174
6 Months-352
1 Year876
2 Year13.4111
3 Year9.5110
5 Year14123

Kotak Select Focus Fund (Kotak Standard Multicap Fund - Direct Plan (D)

Note: Kotak Select Focus Fund has been renamed as Kotak Standard Multicap Fund w.e.f. May 25, 2018 The main objective of the fund is to generate long-term capital appreciation from a portfolio of equity and equity related securities, which are generally focused on a few selected sectors.

PeriodReturns (%) (NAV as on Jul 09, 2018) Rank
1 Month0.7-
3 Months1.6-
6 Year-1.4-
2 Year9.4-
3 Year17.6-
3 Year14.4-
5 Year22.6-

Axis Midcap Fund – Direct Plan

The objective of the scheme is to achieve long term capital appreciation by investing predominantly in equity as well as equity related instruments of Mid Cap companies.

PeriodReturns (%) (NAV as on Jul 09, 2018 Rank
1 Month0.1 -
3 Months1.2-
3 Months1.6-
1 Year18.3-
2 Year18.7-
3 Year11.4-
5 Year24.9-

Invesco India Growth Fund - Direct Plan (D)

The scheme seeks to generate capital appreciation from a diversified portfolio of predominantly Equity plus Equity Related Instruments of Large as well as Midcap companies.

PeriodReturns (%) (NAV as on Jul 09, 2018 Rank
1 Month-0.6-
3 Month0.1-
6 Month-0.1-
1 Year16.6-
2 Year20.1-
3 Year13.8-
5 Year21.3-

BNP Paribas Dividend Yield Fund – Growth (BNP Paribas Multi Cap Fund w.e.f. May 10, 2018)

This investment targets to generate long term capital actively managed portfolio of equity and equity related securities across market capitalization, although there is no guarantee that the investment objective of the scheme will be realized. Also, it does not assure/ guarantee any returns.

PeriodReturns (%) NAV as on Aug 20, 2018) Rank
1 Month4.564
3 Months2.267
6 Months-0.283
1 Year476
2 Years11.466
3 Years9.551
5 Years20.238

HSBC Dividend Yield Equity Fund

The main objective of this Fund is to provide long-term capital growth from a diversified portfolio of equity and equity related instruments. The main focus is to invest in the stocks of the companies facing out-of-ordinary conditions.

PeriodReturns (%) NAV as on Jun 30, 2017 Rank
1 Month --
3 Month --
6 Month--
1 Year--
2 Years--
3 Years--
5 Years--

UTI Mastershare Unit Scheme(D)

This fund intends to generate long term capital by investing mainly in equity and equity related securities of the large cap companies. Although there is no assurance that the investment objective will be achieved.

PeriodReturns (%) NAV as on Aug 20, 2018 Rank
1 Month5.5-
3 Month7.8-
6 Month10.1-
1 Year5.2-
2 Year15.2-
3 Year10.4-
5 Year30.4-

Canara Robeco F.O.R.C.E Fund - Regular Plan (Canara Robeco F.O.R.C.E Fund has been renamed as Canara Robeco Consumer Trends Fund w.e.f. May 14, 2018)

The main of this scheme is to furnish long term capital by mainly investing in equity and equity related securities of companies which directly or indirectly benefit from the growing consumer demand in India.

PeriodReturns (%) NAV as on Aug 20, 2018 Rank
1 Month--
3 Month0.942
6 Month-4.525
1 Year-1.342
2 Year22.637
3 Year19.229
5 Years4935

FAQs on Best Dividend Paying Mutual Funds

How are dividends paid out in mutual funds?

Cash dividends are always not possible, hence most of the companies chose to pay annual cash dividends to reward long-term shareholders and encourage new investors.

How is the dividend calculated for mutual funds?

Mutual fund dividends are always calculated on the face value of the scheme. The investor will receive 20% of Rs. 10 (face value) on 200 units = Rs. 2/unit = Rs. 400 as dividend. Then the day end NAV will become 26.85 {i.e. 28.85 - 2}. Dividend Reinvestment: Rs. 400 will be reinvested on ex dividend NAV (400/26.85 = 14.8977).

Is there any lock-in period for mutual funds?

No, there is no lock-in period for Mutual funds except for ELSS Funds.

Are Index Funds low risk?

No, it is not necessary that all Index funds are low risk.

When dividends are paid to investors?

Dividends are mostly paid out in case the company has excess earnings and decides to pay a dividend to common shareholders; an amount is declared along with a payable date. However, this is determined quarterly after a company finalizes its income statement and the board of directors meets to review the financials.

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