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  • Best Dividend Paying Mutual Funds

  • Dividend mutual funds refer to stock mutual funds that chiefly invest in organisations that offer dividends. Dividends refer to profits or revenues that are earned by companies and which are shared with the shareholders of the company. The profits are nothing but the yield that mutual funds get by selling the shares at prices higher than what it was purchased for. Depending on the scheme, the fund manager can either declare a dividend or use the profits to purchase stocks.

    When you invest in a debt mutual fund, you will be able to enjoy predictable returns. On the other hand, when you invest in an equity-linked fund, your returns will be very volatile in nature. However, when you choose an equity-linked fund that offers dividends, you can enjoy maximum profitability which will result in excellent growth for your funds.

    How Do Dividend-Paying Mutual Funds Work?

    Dividend-paying mutual funds provide investors with annualised payouts. These payouts will be made on a regular basis and hence, as an investor, you will feel safe and secure with these funds. These dividends will be paid from the revenues earned by the fund during the previous year.

    Mutual Funds (MF) with a dividend option do not show a high growth in their Net Asset Value (NAV) because the dividends are paid out on reaching a specific level almost immediately. Fund houses are required to pay 28.84% as a Dividend Distribution Tax (DDT) in the case of debt funds and this is inclusive of cess and surcharge. Equity mutual funds, on the other hand, do not attract a DDT.

    Dividend mutual funds are ideal for investors who do not have an appetite for risk and who wish to receive regular payouts as a source of income.

    Best Dividend-Paying Mutual Funds

    Best Dividend Paying Mutual Funds
    Best Dividend Paying Mutual Funds
    • Franklin India Opportunities Fund (D) - This fund is operated by Franklin Templeton MF and since its launch, the fund has offered 11.44% returns on investment.
    • Aditya Birla Sun Life Frontline Equity Fund (D) - Run by Aditya Birla Sun Life MF, this fund is an open-ended scheme and since launch has offered 21.48% returns.
    • BNP Paribas Dividend Yield Fund – Growth - This fund is now called as BNP Paribas Multi Cap Fund and its benchmark index is NIFTY 200 TRI.
    • Aditya Birla Sun Life Dividend Yield Plus – Growth - With assets worth Rs.992 crore, this plan has a good dividend payment history.
    • ICICI Prudential Dividend Yield Equity Fund – Growth - The fund house operating this fund is ICICI Prudential MF and has offered 14.59% returns since launch.
    • Principal Dividend Yield Fund – Growth - Operated by Principal MF, this fund has offered returns of 12.93%.
    • L&T Emerging Businesses Fund - Direct Plan (D) - With assets worth Rs.5,001 crore, the fund has offered returns of 28.87%.
    • UTI Dividend Yield Fund – Growth - This fund has showed returns of 15.12% since its launch and manages assets worth Rs.2,678 crore.
    • HSBC Dividend Yield Equity Fund - This fund has now been merged with the HSBC Multi-Cap Equity Fund and aims to generate capital appreciation and dividend yield. It mainly invests in equities and equity-related stocks of domestic Indian firms.
    • Kotak Select Focus Fund - Direct Plan (D) - The fund is managed by Kotak Mahindra MF and holds assets worth Rs.19,228 crore.
    • Axis Mid Cap Fund - Direct Plan (D) - This fund has offered returns of 19.90% since its launch and manages assets worth Rs.1,417 crore.
    • UTI Mastershare (D) - This is a large cap equity fund and has assets worth Rs.5,156 crore.
    • Invesco India Growth Fund - Direct Plan (D) - This fund holds assets worth Rs.484 crore and has offered returns of 18.85%.
    • Canara Robeco F.O.R.C.E Fund - Regular Plan (D) - It is an equity fund with assets worth Rs.226 crore and has offered returns of 16.21% since its launch.

    Union Small and Mid Cap Fund - Regular Plan (D) - This fund has fetched returns of 11.83% since its launch and manages assets worth Rs.339 crore.

    Disclaimer: Mutual Fund investments will be subject to market risks. Any mutual fund listed in the article does not guarantee fund performance or its underlying creditworthiness. We have created the list given above by taking only one factor into consideration, which is the payment of dividends. These above-mentioned funds will most likely offer excellent returns according to the dividends earned by the fund. These results can vary with time.

    Mutual Funds Related News

    • KYC circular issued by SEBI could affect rupee valuation and stocks

      The recent circular issued by the Securities and Exchange Board of India (SEBI) on KYC (Know Your Customer) could have a significant impact on the stock markets and the valuation of the rupee. It may cause the stock markets to tumble and weaken the value of the rupee. This warning has come from a body of distinguished foreign funds, handled by Indian origin persons and institutions. The Asset Managers’ Roundtable of India (AMRI) has sought an intervention from government authorities of the highest order. It has also stated that the KYC circular issued in April 2018 for Foreign Portfolio Investors (FPIs) has led to a blanket ban on the OCI (Overseas Citizens of India), PIOs (Persons of Indian Origin), and NRIs (Non-Resident Indians) investing in mutual funds. The regulated domestic institutions will also face the blanket ban. The market regulator has extended the deadline of compliance from 31 August 2018 to 31 December 2018.

      4 September 2018

    • Mutual fund expert recommend investors to allocate 50% of their assets to debt funds

      Mr. A Balasubramanian, CEO of Aditya Birla Sun Life AMC Ltd., believes that a rate hike of 50 basis point can be expected in the current fiscal. He has stated that its not just equity funds that investors should look at but also pay attention to debt funds by allocating 50% of their assets to it. The expected rate hike is pointed by the recent hike in the Minimum Support Prices (MSP) and the rising oil prices. The emerging markets in India has also seen better conviction and the behavior of Indian rupee also seems to be positive. During the past 1 year, the yield of 10-year government bonds has also increased to a high of 8% from the previous 6.45%. Due to these factors, mutual fund experts feel that investors should invest in debt funds to grow their capital.

      1 August 2018

    • Axis Mutual Fund becomes top performer due to 4 blue chip stocks

      The investment strategy of not running behind returns and sticking to financial stocks has aided Asset Management Co. to beat its competitors. The fund house has become the top performer by riding the volatility wave in the capital market. The Axis Bluechip Fund has beaten 35 actively managed funds and 9 index funds to gain 25% over the last year. The fund has Kotak Mahindra Bank Ltd., HDFC Corp., HDFC Bank Ltd. and Tata Consultancy Services as the top holdings making it the top performing fund in the large-cap category. The companies in the top holdings had managed to contribute over 3 quarters of gains this year on the S&P BSE Sensex Index.

      Axis Mutual Fund has around $12 assets under management (AUM) and in December 2017, it let go off some smaller firms prior to the gush inflows lifting its valuations. A top official of Axis Mutual Fund has revealed that the stimulation in government spending ahead of the federal elections has led to companies benefiting from improved consumer demand. Therefore, the fund house is tracking the earnings closely to observe the progress of the consumer demand.

      27 July 2018

    • Asset base of mutual funds in India contributes to just 11% of GDP

      Ahead of its Initial Public Offering (IPO) on 25 July, Managing Director of mutual funds firm HDFC Asset Management Company (AMC), Mr. Milind Bharve has stated that the Indian mutual fund industry has immense growth potential. He reveals that the asset base of the Indian mutual fund industry makes up for just 11% of the GDP when compared to the global average of 62% and there is a huge scope of growth. Since Indians have a culture of saving, Mr. Bharve feels that this can be channelised towards the mutual fund industry and boost the growth of the industry. Every year, Indians save approximately Rs.20 lakh crore.

      The IPO of HDFC AMC will open at a price range of Rs.1,095 to Rs.1,100 per share and will offer 2.54 crore equity shares out of which HDFC will offload 85.92 lakh shares while its partner Standard Life Investments will shell out 1.68 crore shares. The total valuation of the IPO will stand at Rs.23,319 crore. Investors will be able to invest up to Rs.2 lakh in the retail category with 13 shares as the upper limit. The IPO will close on the 27 July 2018.

      23 July 2018

    • Debt mutual funds with lower ratings gain popularity among High Networth Individuals

      Affluent investors have now found a new interest in a category of debt mutual funds that have low-rated holdings. This category of mutual funds, known as credit risk funds and previously known as credit opportunities, is at the moment seeing high inflows. As a result of the improvement in credit ratings of companies and the increase in interest rates, credit risk funds have a potential to deliver returns of 9% to 10% in a year. Affluent investors are, therefore, finding refuge in this kind of funds. Credit risk funds invest up to 65% in corporate debt securities rated AA or lower. Instead of corporate bond funds, they invest in lower rated papers.

      After the recent hike in repo rates by the Reserve Bank of India (RBI), the yield to maturity (YTM) of credit risk funds was pushed up due to bonds yields moving upward. Corporates had in the last year reduced their debts causing the business cycle to turn and outlook for cyclical business to improve. If held till maturity, credit risk funds can fetch total gross returns of around 9.2% to 11.4%.

      6 July 2018

    • YES Bank receives SEBI’s approval to start mutual fund business

      The Securities and Exchange Board of India (SEBI) has approved YES Bank’s application to launch mutual fund business in India. The private lender wholly owns the YES Asset Management (India) Ltd. (YAMIL) which is set to launch mutual fund offerings in both equity and debt markets. The fund offerings are likely to be launched over the next 6 to 12 months. Though SEBI has given the final regulatory nod, YES Bank is still awaiting approval from the Reserve Bank of India (RBI).

      The MD and CEO of YES Bank, Mr. Rana Kapoor has communicated that the fund house YAMIL will take advantage of YES Bank’s expertise in relationship capital and knowledge banking across corporate, retail and institutional investors so as to channelize their assets in debt and capital markets effectively. This move will also enhance the wealth management strategy and retail liabilities of YES Bank while allowing YAMIL to strengthen the ‘DIGICAL’ distribution network of the bank to offer a seamless banking and investment experience to the customers.

      5 July 2018

    • RBI rate hikes may be bad news for debt mutual funds

      The Reserve Bank of India (RMI) is likely to increase the interest rates and this may not favour the debt schemes, especially long-term ones. Bond prices and interest rates are inversely proportional to each other which means that the hike in interest rates will make bonds less attractive. Bonds relatively offer low interest rates and hence, investors will not prefer to invest in them. This will, in turn, result in the falling of bond prices particularly the long-term schemes. To curb this, fund managers are planning to reduce the exposure of their schemes to a shorter duration.

      17 May 2018

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