Final Up to date on Jan 29, 2025 by Vanessa Sequeira
Are you on the lookout for a dependable supply of revenue out of your investments? Dividend mutual funds is perhaps the proper possibility for you. These funds are designed to distribute a portion of their earnings to buyers at common intervals. By selecting the most effective dividend-paying mutual funds, you may benefit from the twin advantages of potential capital development and common revenue. On this article, let’s discover the most effective dividend mutual funds in India, advantages, disadvantages, taxation on dividend mutual funds, the right way to spend money on them, distinction between development and dividend mutual funds, and extra.
Finest Dividend Mutual Funds in India
Word: The information is dated twenty fifth July 2024. The next parameters are used on Tickertape Mutual Fund Screener to get the checklist of the most effective dividend-paying mutual funds:
- Class > Fairness > Dividend Yield Fund
- Absolute Returns – 1Y: Type from highest to lowest.
You’ll be able to add a number of parameters or create customized filters to analyse the mutual funds.
🚀 Professional Tip: Use Tickertape’s Mutual Fund Screener to filter and evaluate funds primarily based on efficiency, expense ratio, and threat. Discover funds that match your objectives and threat tolerance for smarter funding selections.
Overview of the Dividend Yield Shares
LIC MF Dividend Yield Fund
The LIC MF Dividend Yield Fund, managed by LIC Mutual Fund, goals to supply constant returns by primarily investing in excessive dividend-yielding firms. Based in 1989, LIC Mutual Fund is one in every of India’s oldest and most trusted asset administration firms. The fund focuses on shares that not solely provide excessive dividend yields but in addition exhibit stability and development potential.
As of the twenty fifth July 2024, the LIC MF Dividend Yield Fund has an Asset Below Administration (AUM) of Rs. 189.29 cr., an expense ratio of 1.45%, and has delivered absolute returns of 59.72% over the previous yr, with a Compounded Annual Development Price (CAGR) of 26.14% over the previous three years.
ICICI Pru Dividend Yield Fairness Fund
The ICICI Pru Dividend Yield Fairness Fund, managed by ICICI Prudential Mutual Fund, is among the largest funds in its class. Established in 1993, ICICI Prudential is famend for its sturdy analysis capabilities and sturdy fund administration practices. The fund focuses on firms with excessive dividend yields to realize each capital appreciation and common revenue distribution. It has an AUM of Rs. 4,256.91 cr., and an expense ratio of 0.54%. The fund has offered absolute returns of 55.24% over the previous yr and a CAGR of 31.33% over the previous three years.
Aditya Birla SL Dividend Yield Fund
Managed by Aditya Birla Solar Life Mutual Fund, the Aditya Birla SL Dividend Yield Fund focuses on investing in firms with a powerful historical past of dividend payouts. Aditya Birla Solar Life Mutual Fund, a three way partnership between the Aditya Birla Group and Solar Life Monetary Inc. of Canada, is thought for its sturdy fund administration and analysis capabilities. The fund has an AUM of Rs. 1,366.05 cr., and an expense ratio of 1.42%. Over the previous yr, it has delivered absolute returns of 53.30%, with a CAGR of 25.59% over three years.
Templeton India Fairness Revenue Fund
The Templeton India Fairness Revenue Fund, managed by Franklin Templeton Investments, seeks to supply excessive present revenue and capital appreciation by investing in a mixture of Indian and overseas equities with a powerful emphasis on dividend-yielding shares. Franklin Templeton is a globally famend funding administration agency, recognized for its deep analysis and disciplined funding strategy. The fund has an AUM of Rs. 2,325.52 cr., an expense ratio of 1.25%, and has achieved absolute returns of 51.95% over the previous yr. The fund’s CAGR over the previous three years stands at 25.80%.
UTI Dividend Yield Fund
The UTI Dividend Yield Fund, managed by UTI Mutual Fund, is among the oldest and most trusted funds in India. UTI Mutual Fund was established in 1963 and has an extended historical past of managing investments with a concentrate on producing constant revenue and long-term capital appreciation. The fund invests primarily in excessive dividend-yielding firms and has an AUM of Rs. 4,071.32 cr. With an expense ratio of 1.39%, the fund has delivered absolute returns of 51.36% over the previous yr and a CAGR of twenty-two.03% over the previous three years.
HDFC Dividend Yield Fund
The HDFC Dividend Yield Fund, managed by HDFC Mutual Fund, focuses on investing in dividend-yielding shares to supply common revenue and long-term capital development. HDFC Mutual Fund, established in 1999, is thought for its sturdy administration and efficiency monitor report. The fund has an AUM of Rs. 5,617.54 cr., and an expense ratio of 0.56%. It has achieved absolute returns of 47.00% over the previous yr and a CAGR of 28.24% over the previous three years.
Sundaram Dividend Yield Fund
The Sundaram Dividend Yield Fund, managed by Sundaram Mutual Fund, invests in excessive dividend-yielding firms to supply common revenue and capital appreciation. Sundaram Mutual Fund, a part of the Sundaram Finance Group, has a status for disciplined funding practices and powerful analysis capabilities. The fund has an AUM of Rs. 923.54 cr., an expense ratio of 0.97%, and has delivered absolute returns of 44.88% over the previous yr. Its CAGR over the previous three years is 21.51%.
Tata Dividend Yield Fund
The Tata Dividend Yield Fund, managed by Tata Mutual Fund, focuses on firms with a constant monitor report of excessive dividend yields. Tata Mutual Fund, established in 1994, is thought for its conservative funding strategy and powerful analysis capabilities. The fund has an AUM of Rs. 998.06 cr., and an expense ratio of 0.47%. It has offered absolute returns of 41.35% over the previous yr and a CAGR of twenty-two.47% over the previous three years.
SBI Dividend Yield Fund
The SBI Dividend Yield Fund, managed by SBI Mutual Fund, goals to spend money on excessive dividend-yielding firms to supply common revenue and long-term capital appreciation. SBI Mutual Fund, established in 1987, is one in every of India’s largest and most respected fund homes. The fund has an AUM of Rs. 7,629.65 cr., and an expense ratio of 0.73%. It has delivered absolute returns of 38.83% over the previous yr.
What Are Dividend-Paying Mutual Funds?
Some firms declare dividends on their shares. Solely when an organization could make earnings can it pay dividends. Therefore, the financials of those firms could be sturdy. Like another mutual fund, the efficiency of dividend mutual funds is subjected to market situations. These are thought of reasonable to high-level threat devices.
Although the commonest pay-out for dividend mutual funds is annual, a number of schemes pay it month-to-month, quarterly, or every day. Although most firms attempt to pay dividends per the settlement, it’s by no means assured. The quantity of the dividend can be not mounted. The Web Asset Worth (NAV) ought to attain the crucial worth for the fund home to pay the dividends. The fund managers won’t restrict themselves to the dividend yield however take a look at a number of different firm development prospects earlier than investing.
Options of Dividend Paying Mutual Funds
The 2 options of dividend mutual funds are
- Asset allocation: In keeping with Securities and Alternate Board of India (SEBI) guidelines, a dividend yield mutual fund should make investments at the very least 65% of the fund corpus in fairness and equity-related devices.
- Danger-reward ratio: Because the dividend paying mutual funds take care of shares, the efficiency could be unstable. Nevertheless, in comparison with different equity-related schemes, dividend mutual funds are much less unstable.
The way to Spend money on the Finest Dividend Mutual Funds with Tickertape?
Tickertape will help you spend money on the most effective dividend mutual funds with ease. Right here’s a step-by-step information:
1. Signal Up and Set Up Your Profile:
First, it’s essential join on Tickertape and arrange your funding profile.
2. Use the Screener:
Tickertape Mutual Fund Screener filters shares primarily based on numerous standards akin to dividend yield, fund efficiency, and expense ratio. There are over 50 such criterias and a characteristic to construct your customized filter. As an illustration, you may search for funds with excessive dividend yield or these with a powerful mutual fund dividend historical past.
3. Analyse Fund Particulars:
After getting a listing of potential funds, you may delve deeper into every one’s particulars. Tickertape offers complete knowledge on fund portfolios, latest dividends of mutual funds, and historic efficiency. With the assistance of thorough details about a fund, you can also make an knowledgeable resolution about investing.
4. Evaluate Funds:
Tickertape lets you evaluate completely different funds aspect by aspect. You’ll be able to evaluate elements like dividend yield, expense ratio, and previous efficiency to decide on the most effective dividend mutual funds. Try x friends.
Once you get the funds primarily based in your most well-liked standards, finances, and threat profile, spend money on them by way of your most well-liked platform of funding. Bear in mind, it’s all the time worthwhile to seek the advice of knowledgeable earlier than investing.
The way to Determine the Finest Dividend Paying Mutual Fund?
Figuring out the most effective dividend-paying mutual funds could be a essential step in attaining a gradual revenue stream out of your investments. Listed below are some elements it’s possible you’ll need to contemplate:
1. Dividend Yield:
You can begin by wanting on the dividend yield of a mutual fund. Dividend yield is calculated by dividing the annual dividends paid by the mutual fund by its present web asset worth (NAV). Larger dividend yield funds can present higher common revenue.
2. Historic Efficiency:
Reviewing the mutual fund dividend historical past can present insights into the consistency and reliability of dividend funds. Funds with a secure and rising dividend historical past is perhaps extra enticing.
3. Fund Portfolio:
Analysing the fund’s portfolio is important. Funds that spend money on excessive dividend yield shares are more likely to provide higher dividends. These shares are sometimes from firms with sturdy monetary well being and the power to pay common dividends.
4. Expense Ratio:
The expense ratio of a mutual fund can have an effect on your returns. Decrease expense ratios imply extra of your cash is working for you, which could be significantly useful in dividend yield funds.
5. Current Dividend Bulletins:
Maintaining monitor of the latest dividend of mutual funds will help you determine developments and make knowledgeable choices. Funds with latest excessive dividend payouts could proceed to carry out properly.
Benefits of Dividend Paying Mutual Funds
Dividend mutual funds can present buyers with a number of potential advantages, that are outlined beneath:
- Typically Robust Financials: The businesses underlying these mutual funds usually have sturdy financials. This energy could counsel the corporate’s functionality to climate market fluctuations, thus offering some stability to your funding.
- Excessive Yield on Dividends Over Time: Dividend mutual funds can doubtlessly provide a excessive yield on dividends in the long run. This attribute could make them a beautiful possibility in case you are on the lookout for investments which may generate substantial returns over prolonged intervals.
- Publicity to Fairness Funds with Much less Danger: Investing in dividend mutual funds can expose you to fairness funds however sometimes with much less threat in comparison with different kinds of fairness investments. This characteristic could be useful in case you are in search of a balanced strategy to fairness investing.
- Steady Revenue at Common Intervals: These mutual funds can present a comparatively secure revenue at common intervals. This common revenue stream could be helpful for planning and managing your funds, particularly in the event you desire predictable returns.
Disadvantages of Dividend Paying Mutual Funds
Dividend mutual funds should not with out their drawbacks, that are outlined beneath:
- Potential Underperformance Throughout Bull Markets: When in comparison with different equity-based schemes, dividend mutual funds could not carry out as properly throughout a bull market. This potential underperformance may imply that you simply would possibly miss out on larger returns that different fairness investments may present throughout such intervals.
- Restricted Development Alternatives: Excessive dividend provision could be initially advantageous for buyers. Nevertheless, it could restrict the corporate’s alternatives for enlargement. This limitation can influence the long-term development prospects of the underlying firms, doubtlessly affecting your returns over time.
Who Ought to Spend money on Dividend Paying Mutual Funds?
Dividend paying mutual funds could also be appropriate for a wide range of buyers:
- First-Time Buyers: These funds could be very best for first-time buyers as a consequence of their sometimes decrease threat in comparison with different fairness investments. If you’re new to investing, these funds can present a solution to acquire publicity to the inventory market with doubtlessly much less volatility.
- Buyers Searching for Steady Revenue: If you’re on the lookout for secure revenue, dividend mutual funds could be an possibility. They will present a comparatively predictable revenue stream by dividend funds. Nevertheless, it is very important do not forget that dividends should not assured, as they rely on the efficiency of the businesses and market situations.
Taxation on Dividends from Mutual Funds as per the 2024 Price range
As an investor in mutual funds, it’s important to know how dividends are taxed. The Union Price range 2024 has launched modifications to the taxation framework for dividends obtained from mutual funds, that are vital for buyers to know:
- Tax Deducted at Supply (TDS): The finances has eliminated the 20% TDS on the repurchase of mutual fund items. Because of this buyers will not have TDS deducted on the time of redemption, permitting them to obtain the total quantity. Nevertheless, buyers are nonetheless chargeable for calculating and paying the suitable capital positive factors tax when submitting their revenue tax returns.
- Dividend Revenue: Dividends obtained from mutual funds at the moment are taxed in line with the investor’s revenue tax slab fee. This alteration aligns with the earlier finances, which shifted the tax burden on dividends from the mutual fund firms to the person buyers.
These modifications imply that whereas buyers will obtain their dividend revenue with out the deduction of TDS, they need to guarantee to report this revenue accurately of their tax filings and pay taxes in line with their relevant slab charges. This may simplify money move however requires cautious tax planning and compliance.
Overseas Dividends
Should you spend money on overseas mutual funds or obtain dividends from overseas firms, these are additionally taxable in India. You’ll be able to select to be taxed at a flat fee of 20% or at your relevant revenue tax slab fee. Should you’ve paid taxes on these dividends within the overseas nation, it’s possible you’ll be eligible for reduction beneath double taxation agreements.
Distinction Between Development and Dividend Mutual Funds
Understanding the distinction between development and dividend mutual funds will help you make extra knowledgeable funding choices. Right here’s an in depth comparability:
| Function | Dividend Mutual Funds | Development Mutual Funds |
| Revenue Distribution | Earnings are paid out to buyers as dividends | Earnings are reinvested again into the fund |
| Revenue | Gives common revenue by dividend payouts | No common revenue, as earnings are reinvested |
| Capital Appreciation | Potential for decrease capital appreciation over the long run | Potential for larger capital appreciation over the long run |
| Most well-liked By | Buyers in search of common money flows from their investments | Buyers targeted on long-term wealth accumulation |
| NAV Influence | NAV could lower after dividend payouts | NAV will increase as earnings are reinvested |
| Tax Implications | Dividends are taxable within the arms of buyers | Capital positive factors are realised solely on redemption |
In abstract, in the event you search common revenue out of your investments, dividend mutual funds is perhaps an acceptable possibility. Alternatively, in case your objective is long-term development and you don’t require periodic payouts, development mutual funds could also be extra acceptable. No matter your alternative, it is very important contemplate your monetary objectives and threat tolerance. Consulting a monetary advisor also can present invaluable insights tailor-made to your particular wants.
To Conclude
Discovering the suitable funding that aligns along with your funding objectives and threat tolerance is tough, particularly if you end up given a number of choices. For this, it’s essential perceive each mutual fund product, the efficiency metrics, the danger concerned, and so forth. and evaluate them to seek out the suitable one for you. That is the place the Tickertape Mutual Fund Screener involves your rescue. It lets you discover the suitable mutual fund primarily based in your monetary objectives.
Kickstart your funding journey right this moment by logging on to Tickertape and linking your dealer account. Earlier than investing, make sure you perceive mutual funds and their varieties after which proceed to analyse the basics of a fund. Not simply that, however preserve your funding objectives and threat urge for food in thoughts. Glad screening and investing!
FAQs In regards to the Finest Dividend Paying Funds in India
1. What’s a dividend in mutual funds?
The dividend is a portion of earnings offered by an organization to the shareholders for investing of their inventory. It represents the revenue generated from the underlying investments within the fund, akin to shares or bonds, which is then paid out to buyers both in money or further shares.
2. Are non-residents of India eligible for dividend paying mutual funds?
Sure. Non-residents of India are eligible to spend money on dividend paying mutual funds.
3. The way to know if the fund supervisor has invested your cash in a dividend mutual funds scheme?
As per the SEBI guidelines, the mutual funds must disclose whole portfolios of all schemes month-to-month on their web site. It permits buyers to evaluate the investments and monitor the allocation.
4. What are the highest month-to-month dividend paying mutual funds in India?
You need to use the Tickertape Mutual Fund Screener to seek out the highest month-to-month dividend paying mutual funds in India primarily based on returns. Nevertheless, the pay-out schedule on the dividend mutual funds varies with the scheme.
5. Do mutual funds pay dividends?
A dividend is a portion of the corporate’s earnings paid to the shareholders. However not all mutual funds pay dividends. Some firms reinvest the revenue again into the corporate for development and enlargement.
