Invest in the Dividend Yield funds recommended by Scripbox that are scientifically and algorithmically selected that best suit your needs.
Learn how Scripbox Recommends funds| Fund Name | Scripbox Opinion | Till Date CAGR | |
|---|---|---|---|
36.1% | 12.8% | ||
36.7% | 13.7% | ||
24% | 12.8% | ||
29.6% | 17.7% | ||
26.1% | 13.9% | ||
- | 5.2% | ||
- | 19.6% |
Invest in these funds with automated best practices like quarterly scans, updates & tax-optimised withdrawals
| Fund Name | Returns Till Date | Expense Ratio |
| HDFC Dividend Yield Fund | 24.20% | 2.08% |
| UTI Dividend Yield Fund | 14.20% | 2.11% |
| IDBI Dividend Yield Fund | 15.20% | 2.52% |
| ICICI Prudential Dividend Yield Equity Fund | 13.40% | 2.47% |
| Tata Dividend Yield Fund | 9.40% | 2.39% |
A dividend is a part of the profit which the company shares with its shareholders. These mutual funds are open ended funds that invest in shares/stocks of companies that pay high dividends. However, a company can pay dividends only if it makes good profits, and therefore, most of these companies have a good track record of profit-making.
As per SEBI guidelines, a dividend yield fund must invest a minimum of 65% of its assets in dividend-yielding stocks. Thus, this acts as a filter for fund managers while selecting stocks. They select companies that can afford to pay high dividends with a proven track record. Besides this, the fund manager also looks for growth prospects and other fundamentals before investing. Investors looking for regular income, even if it is low, should consider investing in these funds.
Dividend yield funds are of two types –
Dividend yield funds are suitable for investors who are looking to earn regular income from their investments. The dividend from these mutual funds may not be very significant, but they cannot be ignored. Also, dividend payout cannot be guaranteed and same each time. It is entirely dependent on the performance of the underlying companies and market movements.
Investors with low-risk tolerance levels can prefer to invest in dividend yield funds. These investors look for stable returns. Also, during the bear market phase, the underlying companies of this fund can provide some dividend payout. Moreover, for retired investors, this fund can act as an income tool. Besides this, it helps investors to diversify their portfolios.
The following are the things that the investor must consider before investing in a dividend yield fund.
Besides the above parameters, investors should also consider the Sharpe ratio, Treynor’s ratio, standard deviation, alpha, beta, etc. Some investors lack time and knowledge to do their research. Thus, they can always consult a financial advisor to guide them in their investments. Financial advisors are experts to help investors plan their investments adequately based on their financial objectives.
To sum up, dividend yield funds can be a good way for capital appreciation and earning dividends in the investment portfolio. While investing in these funds, it is crucial to consider the fund size and historical performance. Investors should avoid making decisions on recent or current performance. Also, diversification plays a vital role in building a portfolio, and investors must make intelligent decisions to create wealth for their future.
