Dividend Yield Mutual Funds

Dividend Yield Mutual Funds

Dividend Yield Mutual Funds are the equity type funds which invest in equity or such related elements. These are the mutual funds shared by the companies who share their higher dividends with the market. The Dividend Yield is the dividend paid per unit which is divided by the market price. Usually, the dividend yield funds invest across 70 to 80% of its corpus in the stock which is higher than the dividend yield of the market. When it comes to investment in such schemes one has to check the with the market price if the market price is high the dividend yield will be low. This type of mutual funds is stable and less volatile so, people who are looking for such features, can go for such investment options. Also, one must remember that, though this equity funds are stable they are not recommended for those who look for aggressive growth.

What are the factors to look before investing in Dividend Yield Funds?

Check the Past Performance-

Investor before investing in this kind of equity funds he/she should check about the performance of the company that will help you analyze or to choose the company whether to invest or not.

Based on Risk Tolerance -

Different investors have different capacity of risk tolerance, depending on that investor must select the suitable equity mutual funds for investor.

Check for the tenure-

Some investors look for short-term tenure some for long-term, so before investing into any equity mutual funds.

Check about the status of the Corpus Funds-

Investor check about the corpus, never go for the low or small corpus funds to gain more.

Check Expense Ratio-

Low expense ratio means good profit and returns, so go for low expense ratio funds and nor for the higher expense ratio funds.

Tax Implications and Exemptions-

These mutual funds offer partial tax exemption; however, the dividend distribution tax is applicable for the organizations while paying the dividend to the shareholders.

What are the types of Dividend Mutual Funds?

Based on the asset allocation Dividend mutual funds are divided into 2 types namely-

  1. Dividend Yield Mutual funds (Equity)
  2. Dividend Yield Mutual Funds (Debt)

What is the top Dividend Mutual Fund investments in India?

• Templeton India Equity Income Fund
• Principal Dividend Yield Fund
• ICICI Prudential Dividend Yield Equity Fund
• UTI Dividend Yield Fund
• Aditya Birla Sun Life Dividend Yield Plus Fund

What are the advantages of Dividend Yield Mutual Funds?

• Higher returns
• Small/ Short tenure plans
• Lesser risks
• Low volatility
• Maximum Tax exemption
• Offers different mutual funds to pick the right scheme.