Invest in Best Dividend Yield Mutual Funds in India 2024
Discover the best Dividend Yield Funds in India for 2024. Learn who should invest, key benefits, risks, and find the top performing Dividend Yield Funds.
What is Dividend Yield Mutual Funds?
Dividend Yield Mutual Funds are the type of funds that invests in companies that hold the potential to pay back dividends. Dividends are the profits that companies distribute to their investors and dividend yield is the ratio of annual dividend for a share to its current share price.
These funds aim to provide investors with regular income in the form of dividends while also offering the potential for capital appreciation.
Who Should Invest in Dividend Yield Mutual Funds?
- Second Income-Seeking Investors: Individuals looking for a regular source of second income stream from their investments.
- Risk-Averse Investors: Those who prefer not taking risks can invest in these funds as they offer steady returns
- Retirees: Retired individuals seeking a steady income as a source to supplement their retirement savings can invest in this
- Long-Term Investors: Investors who are willing to stay invested for a long time and can benefit from both dividend income and capital appreciation
Top Performing Dividend Yield Funds
| Fund Name | Category | Risk | 6-Month Return (%) | 1-Year Return (%) | Rating | Fund Size (₹ Crores) |
|---|---|---|---|---|---|---|
| Sundaram Dividend Yield | Dividend Yield | Very High | 23.21% | 41.17% | NA | 3923.54 |
| HDFC Dividend Yield Tax Saver | Dividend Yield | Very High | 17.68% | 44.30% | NA | 5617.54 |
| SBI Dividend Yield Fund | Dividend Yield | Very High | 19.25% | 35.70% | NA | 8375.28 |
| Templeton India Equity Dividend Yield | Dividend Yield | Moderately High | 23.24% | 46.44% | NA | 2325.00 |
| ICICI Dividend Yield Equity Fund | Dividend Yield | Very High | 16.33% | 38.56% | NA | 4256.00 |
Factors to Consider While Investing in Dividend Yield Mutual Funds
- Historic Dividend Yield: Assess the historical dividend yield of the fund to estimate your potential income. Take a call to invest only when you are 100% satisfied
- Portfolio Balance: If you wish for portfolio stability, ensure you invest in funds that have higher allocation to large-cap equities
- Fund Manager’s Track Record: Evaluate the experience and expertise of the fund manager in managing his dividend yields’
Major Benefits of Dividend Yield Mutual Funds
- Regular Income: Receive a steady stream of income through investing in Dividend Yield Mutual Funds
- Capital Appreciation: It allows capital appreciation along with periodic returns.
- Stability: Investments in stable and steady companies reduce volatility.
- Equity Exposure: It’s a dream of every investor to invest in equity market, however, for risk reasons, they do not try, since Dividend Yield Funds invest in large-cap companies, you can be assured of a stable return
Risks Involved in Dividend Yield Mutual Funds
- Taxation: The government has increased the tax of dividends income, so this impacts dividends yield too
- Dividend Risk: Dividend payments cannot be taken as guaranteed and can be affected by the performance of the underlying companies
- Concentration risk: Overexposure to certain sectors can increase risk if those sectors perform poorly
Frequently Asked Questions (FAQs) about Dividend Yield Mutual Funds
1. How do Dividend Yield Mutual Funds generate income?
These funds invest in high dividend-paying stocks. The dividends generated from these stocks are potentially reinvested in Mutual Funds and paid out based on the funds’ terms
2. Are dividends from Dividend Yield Mutual Funds guaranteed?
No, they are not guaranteed. Just like any other equity funds, the returns can vary based on market performance
3. Can I reinvest the dividends received from Dividend Yield Mutual Funds?
You can reinvest the dividends received to purchase new fund units anytime
4. How do I choose the best Dividend Yield Mutual Fund?
Consider factors like historical performance, your risk tolerance, expense ratio, fund manager’s track record, and your investment goals before choosing the fund. You can seek the assistance of Fincover, whose MF experts would consider you pick the best Dividend Yield Fund in the market