Dividend Yield Funds

Dividend yield mutual funds focus on companies that pay regular dividends, offering stability and moderate risk. These funds are suitable for income-oriented investors seeking steady returns and potential capital appreciation.

Best Dividend Yield Funds Sorted by Last 3 Year Returns

About Dividend Yield Mutual Funds

Dividend Yield Mutual Funds are equity-oriented mutual funds that primarily invest in companies known for paying consistent and high dividends. These funds aim to provide investors with both capital appreciation and a regular income stream through dividends. Typically, they focus on established, financially sound companies with a stable earnings track record and a strong dividend distribution history.

These funds are considered relatively less volatile than other equity funds since the underlying companies are often well-established and less prone to large market swings. However, the actual dividend payouts to investors depend on the performance of the underlying stocks and market conditions.

How Do Dividend Yield Funds Work?

Dividend Yield Funds work by selecting a portfolio of high dividend-paying stocks. Fund managers analyze dividend yield ratios, payout consistency, and company fundamentals to curate a diversified portfolio. While the primary goal is to earn steady income through dividends, these funds also aim to grow the invested capital over the long term through price appreciation of underlying stocks.

Features of Dividend Yield Mutual Funds

• Focus on Dividend Income: Invest in companies that offer regular and high dividend payouts.
• Moderate Risk Profile: Considered less volatile than growth-focused equity funds due to the stability of dividend-paying companies.
• Diversification: Generally well-diversified across sectors and industries to minimize risk.
• Suitable for Long-Term Investors: Best suited for those looking for regular income and long-term capital appreciation.
• Tax Implications: Dividends are added to the investor’s income and taxed as per the applicable slab. Capital gains are taxed based on holding period.