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Aditya Birla Capital LimitedAditya Birla Capital Limited (“ABCL”) is a listed systemically important non-deposit taking Non-Banking Financial Company (NBFC) and the holding company of the financial services businesses. ABCL and its subsidiaries/JVs provides a comprehensive suite of financial solutions across Loans, Investments, Insurance, and Payments to serve the diverse needs of customers across their lifecycles. Powered by over 61,600 employees, the businesses of ABCL have a nationwide reach with over 1,690 branches and more than 200,000 agents/channel partners along with several bank partners.
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What is a Dividend Yield Fund?
A dividend yield fund is an equity mutual fund which invests primarily in stocks and securities of companies that have consistently paid dividends in the past. These funds aim to grow the portfolio with regular dividend income.
Advantages of Dividend Yield Funds
Attractive return potential
With dividend yield funds, you get portfolio growth through dividend additions and capital appreciation of the underlying securities.
Lower risk
Dividend-yielding stocks belong to stable companies which are consistently making profits. This lowers volatility risks.
Professional fund management
Benefit from expert fund management by professionals who can pick high dividend-yielding securities and manage them actively.
Potential for Regular Income Stream
These funds invest in companies with a history of consistent dividend payouts, offering investors the possibility of a regular income stream in addition to potential capital appreciation.
Explore Dividend Yield Funds
Most Popular
AUM: 23427(Cr)
Risk: Very High
- MIN. INVESTMENT 500
- 5 YRS RETURNS 33.32%
- Invest (Per Month) ₹10000
- Get (30 Yrs) ₹24,850*
*Projections/estimations is backtested using historical data.
Most Popular
- AUM: 23427(Cr)
- Risk: High
- MIN. INVESTMENT 1000
- 5 YRS RETURNS 33.32%
- Invest (Per Month) ₹15000
- Get (30 Yrs) ₹34,850*
*Projections/estimations is backtested using historical data.
Dividend Yield Funds Returns Calculator
REGULAR INVESTMENT
SIP
Invest systematically in regular amounts and build a corpus with a disciplined investing habit.
ONE TIME INVESTMENT
Lump sum
Invest once with the facility of lump sum investing and save at your will. Time the market correctly and earn good returns.
Total Amount Invested
₹ 0
after 30 years you will get a return of
₹ 0
Disclaimer: Projections/estimations is backtested using historical data.
Total Amount Invested
₹ 0
after 30 years you will get a return of
₹ 0
Disclaimer: Projections/estimations is backtested using historical data.
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Understanding Dividend Yield Funds
Table of Contents
What are Dividend Yield Funds?
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Dividend yield funds are a type of equity mutual fund wherein a minimum of 65% of the portfolio is invested in stocks and securities of companies that yield dividends. These funds, thus, offer good returns as dividends get added to the portfolio to boost its value.
What are the features of Dividend Yield Funds?
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Lower volatility as the portfolio invests in profitable companies
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Limited diversification in portfolio allocation
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Suitable for investors with a long-term investment horizon of 7+ years
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Invest through SIPs or lump sum
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Earn tax-free returns up to ₹1 lakh if you stay invested
Things to keep in mind when investing in Dividend Yield Funds
There is a lower chance of capital appreciation as dividends are the main source of portfolio growth
Fund managers have limited choice of stocks with a good history of dividend payments
Stock selection is done by matching the dividend yield of securities against a benchmark index
The funds are suitable for new investors or those looking for stable equity returns
What should be the investment horizon for Dividend Yield Funds?
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Dividend yield funds look for dividend income to grow the portfolio’s value
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Since dividends are declared once or twice a year, short-term investment is not feasible
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There’s also a short-term volatility risk as the underlying securities might not yield sufficient dividends.
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A long-term investment horizon is recommended for growth and capital appreciation
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A long-term horizon also helps earn attractive investment returns
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You also get a tax benefit on staying invested for a longer tenure
What is the tax implication of Dividend Yield Funds?
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Returns up to ₹1 lakh are tax-free if you stay invested for 12 or more months
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Returns exceeding ₹1 lakh are taxed at 10%
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For redemption within 12 months, returns are taxed at 15%
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Dividends earned, if any, are taxed at your income tax slab rate
What are the payout options?
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Dividend option
Earn dividends on your investment at regular intervals
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Growth option
Accumulate the returns over the investment tenure and get a lump sum amount on redemption
FAQs On Dividend Yield Funds
Yes, dividend yield funds can be suitable for long-term investors seeking regular income and potential capital appreciation.
The minimum investment amount varies among funds. It can start from ₹100 for a SIP and ₹1000 for a lump sum investment and go up depending on the mutual fund house you choose.
Yes, you can invest in dividend yield funds through SIP (Systematic Investment Plan). SIPs allow you to invest systematically, in affordable amounts and build up a good corpus.
If you choose the dividend payout option, you can get regular income through dividends paid by the dividend yield fund.
Dividend yield funds typically invest in companies with a history of paying dividends, often from sectors like utilities, consumer goods, and financials.
Consider factors such as the fund's historical dividend payout, expense ratio, fund manager's expertise, and the overall investment strategy.
Dividend yield funds can be suitable for first-time investors seeking income, but it's essential to understand the risks and conduct thorough research.
The biggest advantage is the potential for a regular income stream through dividends, providing investors with a source of cash flow.
You can redeem (sell) dividend yield fund units anytime during market hours, based on your financial needs and market conditions.
Exit loads vary among funds. Please check the specific fund's documentation or contact the Aditya Birla Sun Life Mutual Funds ABSLMF for details on exit loads on redemptions.
Dividend yield funds are invested majorly in companies that yield dividends.
While a dividend is the share of earnings that a company pays to shareholders, dividend yield is the stock price percentage that the company returns as dividends.
A 2-4% dividend yield is considered ideal as one higher than 4% would mean higher risks.
Dividend yields are ideally long-term equity investments that have the potential to provide high returns over the years.
Yes, but only at the discretion of the fund manager and as per fund guidelines.
Types of Dividend Yield Funds
Funds Based On Market Capitalisation
Funds Based On Investment Style
Other Asset Class Funds
ETF Funds
Invest in funds listed and traded on the stock exchange
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Fund of Funds
Mutual funds that invest in other mutual funds both in India and globally
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Hybrid Funds
Get a mix of equity, debt and other asset classes for a diversified portfolio
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Index Fund
Passively-managed mutual funds tracking a particular index
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