Best Dividend Mutual Funds: Best Dividend Paying Mutual Funds
Mutual Fund schemes are available in growth and dividend option. Within the dividend option, payout or reinvestment options are available. The dividend option can re-invest (dividend reinvestment option) or pay out the dividends (dividend payout option) the profits made by the fund. Profits or dividends are distributed to the investor from time to time depending on the profits made. Dividends are declared only when the scheme makes a profit, and it is at the discretion of the fund manager. The dividend is paid from the NAV of the unit. Therefore, check the dividend history of the funds and invest in the best dividend paying mutual funds.
A ‘Dividend payout scheme’ does not guarantee a regular income by way of dividends. Dividends are given to the investor depending on the fund’s ability to generate returns. Remember, it is a market-linked product, and there is never an income guarantee with such a product.
Upwardly presents the best dividend mutual funds for 2019-20.
The fund seeks to generate long term capital appreciation and current income from a portfolio constituted of equity and equity related securities as well as fixed income securities (debt and money market securities). The funds long term track record has been consistent in both absolute terms and relative to its benchmark. It has Dynamic asset allocation between equity & debt which combines high-return potential of the equity asset class with low-risk benefits of the fixed income asset class. With a 5-year dividend yield of 13.01%, the fund gives regular monthly dividends. The funds return since inception is 14.53%. This fund is among the highest dividend paying mutual funds.
The fund has 65-80% of the portfolio will be invested in equity/equity related instruments. The aim of equity strategy is to build a portfolio of companies across market capitalization which have: reasonable growth prospects, sound financial strength, sustainable business models and acceptable valuations that offer the potential for capital appreciation. Also, the fund aims to maintain a reasonably diversified portfolio at all times. Investment in debt securities is guided by credit quality, liquidity, interest rates and their outlook. With a 5-year dividend yield of 11.81%, the fund gives regular yearly dividends. The funds return since inception is 15.89%.
The fund tends to follow a flexi-cap approach for market cap, depending on risk and return aspects of various market sub-segments. The fund follows a bottom-up approach for stock selection and top-down approach for sector selection. In debt instruments, the fund focuses on highly rated investment instruments. With a 5-year dividend yield of 11.06%, the fund gives regular quarterly dividends. The funds return since inception is 19.60%.
The fund follows a rather conservative investment strategy in both equity and debt. On the equity side, the fund predominantly invests in large-cap stocks following value investing style. The fund is very conservative about taking on credit risks. Hence, the fund maintains a low profile with the debt portion. With a 5-year dividend yield of 9.78%, the fund gives regular monthly dividends. The funds return since inception is 13.98%.
The fund falls under the Hybrid Aggressive funds’ category. The technical difference is that while Hybrid Aggressive funds have their equity allocation above 65% – 80% at all times, the equity-debt percentage split in a BAF/DAA fund can swing substantially either side based on market conditions. Different asset classes exhibit different risk-return profile and relatively low correlation to each other as compared to investments within the same asset class. The debt-equity mix at any point of time will be a function of interest rates, equity valuations, medium to long term outlook of the asset classes and risk management, etc. With a 5-year dividend yield of 10.60%, the fund gives regular monthly dividends. The funds return since inception is 18.61%. This is among the top best dividend paying mutual funds.
The fund is a Hybrid mutual fund belonging to the Balanced Advantage Fund / Dynamic Asset Allocation category. The fund seeks to provide investors with an opportunity to benefit out of market volatility. It uses an in-house valuation model seeking to limit the downside risk during a falling market and aiming to capture growth opportunities in a rising market. The fund uses the price to book value ratio or P/B ratio of the market to decide its equity allocation. ICICI BAF is among the best dividend paying mutual funds. The fund’s 5-year dividend yield is 10.16%. The fund’s return since inception is 10.38%.
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