All returns displayed below are CAGR.
Dividend Yield52.82
+1.50%
Dividend Yield30.41
-3.50%
Dividend Yield437.58
-9.40%
Dividend Yield176.59
-3.90%
Dividend Yield24.77
-4.30%
Dividend Yield17.82
-3.70%
Dividend Yield136.03
-8.40%
Dividend Yield133.90
-6.10%
Dividend Yield14.97
-5.20%
Dividend Yield9.47
-
| Fund names | NAV(₹) | VR Rating | 1Y Returns | 3Y Returns | 5Y Returns |
|---|---|---|---|---|---|
| ICICI Pru Dividend Yield Equity Fund(G) Equity Dividend Yield | 52.82 | +1.50% | +23.80% | +27.70% | |
| LIC MF Dividend Yield Fund-Reg(G) Equity Dividend Yield | 30.41 | -3.50% | +21.20% | +21.20% | |
| Aditya Birla SL Dividend Yield Fund(G) Equity Dividend Yield | 437.58 | -9.40% | +20.10% | +21.30% | |
| UTI Dividend Yield Fund-Reg(G) Equity Dividend Yield | 176.59 | -3.90% | +20.00% | +21.00% | |
| HDFC Dividend Yield Fund-Reg(G) Equity Dividend Yield | 24.77 | -4.30% | +19.10% | - | |
| Tata Dividend Yield Fund-Reg(G) Equity Dividend Yield | 17.82 | -3.70% | +17.00% | - | |
| Franklin India Dividend Yield Fund(G) Equity Dividend Yield | 136.03 | -8.40% | +17.00% | +23.90% | |
| Sundaram Dividend Yield Fund(G) Equity Dividend Yield | 133.90 | -6.10% | +16.20% | +19.10% | |
| SBI Dividend Yield Fund-Reg(G) Equity Dividend Yield | 14.97 | -5.20% | - | - | |
| Baroda BNP Paribas Dividend Yield Fund-Reg(G) Equity Dividend Yield | 9.47 | - | - | - |
Dividend Mutual Funds are a prominent type of equity-oriented investment option, aiming to deliver both steady income through dividends and potential long-term wealth creation. These funds are particularly suited for investors who value a balance between regular cash flows and equity market participation.
By investing primarily in shares of stable, dividend-paying companies, Dividend Yield Mutual Funds appeal to those who seek a more conservative route into the equity segment without sacrificing the upside potential associated with equities.
Dividend Yield Funds are a class of equity funds that primarily allocate their assets to stocks of companies with a strong track record of paying regular dividends. These funds typically invest at least 65% of their portfolio in such dividend-paying equities, adhering to guidelines set by the Securities and Exchange Board of India (SEBI).
The principal aim is to provide investors with consistent income in the form of dividend payouts, along with capital appreciation over time. The frequency and size of dividend distributions depend on company performance and prevailing market conditions.
Offers the prospect of periodic dividend payouts, creating a regular income stream.
By focusing on established companies with stable dividends, these funds often exhibit lower volatility compared to pure growth-oriented equity funds.
Exposure across sectors and multiple blue-chip companies helps mitigate risks.
Managed by experienced fund managers who identify robust dividend opportunities and oversee allocation.
Alongside dividends, investors may benefit from long-term share price appreciation.
Capital gains and dividends attract tax treatment favourable to some investors, depending on holding period and income segment.
A Dividend Yield Fund, a specific sub-category within Dividend Mutual Funds, targets stocks offering dividend yields higher than the market average. Here is how these funds typically operate:
Fund managers shortlist companies that have a history of paying consistent and relatively high dividends, the “dividend yield” being defined as the annual dividend per share divided by the share price, expressed as a percentage.
The portfolio comprises a mix of large-cap and mid-cap companies, potentially with allocations to value and defensive sectors (such as utilities or FMCG).
Fund managers may periodically rebalance the portfolio to optimise returns, address underperformance, or adapt to changing market conditions.
Investors may receive dividend payouts directly or have them reinvested in additional fund units, depending on the chosen investment option (income distribution cum capital withdrawal (IDCW) or growth).
When a dividend is distributed, the NAV typically falls by the dividend amount, reflecting the payout to investors.
Dividend Mutual Funds offer a unique blend of stability and growth, making them suitable for a variety of investor profiles:
Ideal for those needing regular passive income, such as retirees or individuals supplementing their salary.
Investors seeking relatively lower risk compared to pure growth funds may find comfort in these funds’ focus on established businesses.
Dividend-paying companies are generally considered resilient, helping cushion the impact during periods of volatility.
The quantum and frequency of dividends are neither fixed nor guaranteed; payments may decline during challenging business environments.
Over the long-term, the combination of dividends and capital growth is attractive, though short-term performance may sometimes lag aggressive equity categories.
Dividend Mutual Funds may suit the following types of investors:
Those who want equity exposure but are wary of extreme volatility may appreciate the fund’s income stability.
Anyone reliant on regular cash flows from investments (such as retirees or private trusts) finds value in periodic dividend payments.
Individuals new to equities might use these funds as a foundation for a diversified, relatively lower-risk portfolio.
Seasoned investors looking to balance highly volatile or growth-centric portfolios can add stability with Dividend Mutual Funds.
Those targeting specific life goals (education, marriage, home purchase) may opt for a systematic investment plan (SIP) in a Dividend Yield Mutual Fund to align with long-term objectives.
Understand your financial goals, investment horizon, and risk appetite before investing.
KYC compliance is mandatory; keep your Permanent Account Number (PAN) and address proof ready.
You can invest directly via the fund house’s online portal or mobile app, through brokers, or via third-party platforms.
Suitable for those who wish to deploy a sizable corpus at once.
Systematic investment plans allow periodic contributions, benefiting from rupee-cost averaging over time.
Opt for ‘growth’ if you want capital appreciation, or ‘IDCW’ if you prefer receiving periodic dividend payouts.
Regular review is important to track performance, evaluate fund manager changes, and adjust allocation, especially in response to life events or market shifts.
| Step | Details |
| Risk profiling | Match fund’s risk with your financial profile |
| KYC | Mandatory under Indian regulations |
| Online/offline mode | Invest via AMC, broker, or aggregator platforms |
| Lumpsum or SIP | One-time investment or systematic plans |
| Fund option | Growth or IDCW (dividend payout) options |
| Portfolio review | Use monthly/quarterly statements and follow market updates |
India’s tax treatment of Dividend Mutual Funds is as follows:
From April 2020, dividends received are taxable in the investor’s hands according to their income tax slab. Mutual fund houses deduct 10% tax at source (TDS) if dividend income exceeds ₹5,000 in a financial year.
0.001% is charged on the redemption of equity fund units.
If dividends are reinvested, the same capital gains tax rules apply upon redemption.
Not available for equity-oriented dividend yield funds.
It is advisable to consult a tax professional for specific queries.
No, Dividend Mutual Funds invest in equities, which naturally expose your investment to stock market risks, sector-specific downturns, and company performance risks. While the focus on dividend-paying stocks may reduce volatility versus pure growth schemes, capital is not protected.
There is no definitive best fund, as suitability varies by investor profile, time horizon, and portfolio needs. You can consider well-performing funds with a strong history, robust asset under management (AUM), reasonable expense ratios, and consistent dividends. Always review the fund’s recent fact-sheet, disclosures, and performance vis-à-vis benchmarks like NIFTY50 and SENSEX.
Dividend Yield Mutual Funds can be a valuable portfolio component, especially for those prioritising regular passive income and relative stability within the equity spectrum. However, they may not deliver the same capital appreciation as growth funds during strong market rallies.
Yes, both dividend income and capital gains from Dividend Yield Mutual Funds are taxable in India. The tax rates depend on your holding period and personal tax slab. Refer to the detailed taxation section above.
Most Dividend Yield Mutual Funds are open-ended, enabling you to redeem units at the prevailing NAV on any business day. Take note of potential exit load charges, which may apply if you redeem within a specified period.
Equity mutual funds, including dividend funds, are generally suitable for a medium- to long-term horizon (three years or more). Investing with a short-term view may expose you to market volatility and reduce your opportunity to earn stable dividend income and capital growth.
