Groww Logo
SWITCH TO DIRECTHELPMUTUAL FUNDS
0% COMMISSION ON GROWW
Home>Mutual Funds>Category>Best Dividend Yield Mutual Funds

Best Dividend Yield Mutual Funds

Dividend yield mutual funds primarily invest in equity shares of companies that declare dividends regularly. Organisations only pay dividends to shareholders if they’re able to make a profit. Hence, without a doubt, the underlying stocks of these funds are of companies that have strong financials. That said, even the best dividend yield mutual funds are associated with moderate to high levels of risk as their performance is subject to volatile market conditions.

Why invest with Groww?

— Registered with SEBI, AMFI & BSE

— Paperless sign up on web & app

— Expert recommendations

— ZERO fees !

Sign Up

List of Dividend Yield Mutual Funds in India

Fund NameCategoryRisk1Y ReturnsRatingFund Size(in Cr)
Sundaram Dividend Yield FundEquityVery High8.5%4₹267
Templeton India Equity Income FundEquityVery High20.0%0₹1,246
IDBI Dividend Yield FundEquityVery High4.2%0₹93
ICICI Prudential Dividend Yield Equity FundEquityVery High18.6%0₹910
UTI Dividend Yield FundEquityVery High6.3%0₹2,917
Aditya Birla Sun Life Dividend Yield FundEquityVery High5.1%0₹819
Tata Dividend Yield FundEquityVery High4.8%0₹626
HDFC Dividend Yield FundEquityVery High16.3%0₹2,889
View All

Features of Dividend Yield Mutual Funds

Here are two salient features of dividend mutual funds: 

Asset allocation: According to Securities and Exchange Board of India (SEBI) rules, a dividend yield mutual fund must invest at least 65% of the fund corpus in equity and equity-related instruments. 

Risk-reward ratio: Top dividend yield mutual funds principally deal with stocks. Hence, their performance is vulnerable to market volatility. However, these schemes are less volatile than most of the other equity-oriented funds because they invest in shares of top companies.  Thus, it’s highly probable that they’ll underperform in a bullish market compared to other equity-based schemes.

Taxability

Short-term capital gains: Short-term capital gains tax of 15% is applicable on the gains from selling units with a holding period of less than 1 year. 

Long-term capital gains: Gains from the sale of units with a holding period of more than one year are taxed at 10%. However, please note that LTCG tax is only applicable on the amount exceeding Rs.1 lakh. Gains of up to Rs.1 lakh are tax-free. 

TDS: Dividends realised from an MF scheme of this type are taxable @ 10% if the sum exceeds Rs.5000.

Who Are These Funds Suited For?

Underlying securities in these funds primarily include stocks of companies with an impressive cash flow position. It allows them to pay dividend regularly. Accordingly, investors can take advantage of dividends by allocating their savings to the best dividend yield mutual fund. Hence, these are known to be suited for investors looking for exposure to equity without assuming too much risk. These are seldom suited for an aggressive return outlook, however, since underlying stocks usually offer stable growth opportunities.

Nonetheless, investors need to take the following things into account to decide the best dividend yield mutual funds for them:

Investment objective: The investment objective of every individual is different. While one might seek stability and regular income, another investor may have an aim to maximise their portfolio value in the short term. Hence, it’s crucial for individuals to identify their investment objective before allocating their funds to the best dividend yield mutual funds 2022

Risk appetite: The risk-bearing capacity varies from one investor to another. For example, a conservative investor will not want to opt for an option that is impacted by volatile market conditions significantly.  Hence, it’s essential for an individual to assess his/her risk profile before parting with their savings. 

Experience of the fund manager: Fund managers of dividend yield mutual funds make changes to a portfolio based on extensive research and analysis. Hence, a fund’s performance depends on how effective its managers’ decisions are. A fund manager with a proven track record is more likely to realise a scheme’s objective. 

Exit load: This refers to a charge that investors have to pay if they redeem their units prematurely. This fee varies from one mutual fund scheme to another. Individuals must make sure to know the exit load before investing in a dividend yield mutual fund. 

Expense ratio: This refers to the yearly maintenance charge levied by a fund house on investors to finance its operating and administrative expenses. This cost has a bearing on a scheme’s NAV, which decides the returns. One must compare the expense ratio of different schemes and consider other vital factors to decide which is the best dividend yield mutual fund for them. 

Direct or regular plan: A direct plan is offered by a fund house directly to investors. No third parties like brokers or distributors are involved in this case. Hence, they report a higher NAV and have a lower expense ratio when compared with regular plans that involve third parties.

Major Advantages

Investors can reap these benefits by investing in the best dividend yield mutual funds:

    • Equity exposure with lower risk: Dividend yield mutual funds are relatively less impacted by market volatility than other equity-oriented MF schemes. Hence, investors who are seeking equity exposure and higher returns than fixed-income instruments, such as bank fixed deposits, can benefit from schemes of this sort. 
    • High returns over a long term: Since dividend yield funds invest in shares of companies that have strong financials and a proven track record, they have the potential to generate high returns in future.
  • Regular income: Since underlying companies in these schemes declare regular dividends, MFs can be an appropriate option for investors seeking regular income and stability.  

Investment routes: Investors can allocate their funds to these schemes via two routes – lump-sum and a Systematic Investment Plan (SIP). The first option allows an individual to invest the entire amount at once. By taking the SIP route, investors can allocate their savings to the best dividend yield mutual funds at fixed intervals, such as monthly, quarterly, or yearly.

Let's have a closer look

Now let us jump and check about these top 10 mutual fund schemes.

Sundaram Dividend Yield Fund Direct Growth

Fund Performance: The Sundaram Dividend Yield Fund has given 14.77% annualized returns in the past three years and 12.53% in the last 5 years. The Sundaram Dividend Yield Fund belongs to the Equity category of Sundaram Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Sundaram Dividend Yield Fund via lump sum is ₹5,000 and via SIP is ₹500.

Min Investment Amt₹5,000
AUM₹267Cr
1Y Returns8.5%

Templeton India Equity Income Direct Plan Growth

Fund Performance: The Templeton India Equity Income Fund has given 21.38% annualized returns in the past three years and 15% in the last 5 years. The Templeton India Equity Income Fund belongs to the Equity category of Franklin Templeton Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Templeton India Equity Income Fund via lump sum is ₹5,000 and via SIP is ₹500.

Min Investment Amt₹5,000
AUM₹1,246Cr
1Y Returns20.0%

IDBI Dividend Yield Fund Direct Growth

Fund Performance: The IDBI Dividend Yield Fund belongs to the Equity category of IDBI Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in IDBI Dividend Yield Fund via lump sum is ₹5,000 and via SIP is ₹500.

Min Investment Amt₹5,000
AUM₹93Cr
1Y Returns4.2%

ICICI Prudential Dividend Yield Equity Fund Direct Growth

Fund Performance: The ICICI Prudential Dividend Yield Equity Fund has given 16.05% annualized returns in the past three years and 10.73% in the last 5 years. The ICICI Prudential Dividend Yield Equity Fund belongs to the Equity category of ICICI Prudential Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in ICICI Prudential Dividend Yield Equity Fund via lump sum is ₹5,000 and via SIP is ₹100.

Min Investment Amt₹5,000
AUM₹910Cr
1Y Returns18.6%

UTI Dividend Yield Fund Direct Growth

Fund Performance: The UTI Dividend Yield Fund has given 14.61% annualized returns in the past three years and 11.4% in the last 5 years. The UTI Dividend Yield Fund belongs to the Equity category of UTI Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in UTI Dividend Yield Fund via lump sum is ₹5,000 and via SIP is ₹500.

Min Investment Amt₹5,000
AUM₹2,917Cr
1Y Returns6.3%

Aditya Birla Sun Life Dividend Yield Fund Direct Growth

Fund Performance: The Aditya Birla Sun Life Dividend Yield Fund has given 13.75% annualized returns in the past three years and 7.41% in the last 5 years. The Aditya Birla Sun Life Dividend Yield Fund belongs to the Equity category of Aditya Birla Sun Life Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Aditya Birla Sun Life Dividend Yield Fund via lump sum is ₹1,000 and via SIP is ₹1,000.

Min Investment Amt₹1,000
AUM₹819Cr
1Y Returns5.1%

Tata Dividend Yield Fund Direct Growth

Fund Performance: The Tata Dividend Yield Fund has given 9.08% annualized returns in the past three years and 16.72% in the last 5 years. The Tata Dividend Yield Fund belongs to the Equity category of Tata Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Tata Dividend Yield Fund via lump sum is ₹5,000 and via SIP is ₹150.

Min Investment Amt₹5,000
AUM₹626Cr
1Y Returns4.8%

HDFC Dividend Yield Fund Direct Growth

Fund Performance: The HDFC Dividend Yield Fund belongs to the Equity category of HDFC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in HDFC Dividend Yield Fund via lump sum is ₹5,000 and via SIP is ₹300.

Min Investment Amt₹5,000
AUM₹2,889Cr
1Y Returns16.3%

Explore all Mutual Funds on Groww

Explore Mutual Funds
ⓒ 2016-2022 Groww. All rights reserved, Built with in India
MOST POPULAR ON GROWWVERSION - 2.4.0
STOCK MARKET INDICES:  S&P BSE SENSEX |  S&P BSE 100 |  NIFTY 100 |  NIFTY 50 |  NIFTY MIDCAP 100 |  NIFTY BANK |  NIFTY NEXT 50
MUTUAL FUNDS COMPANIES:  ICICI PRUDENTIAL |  HDFC |  NIPPON INDIA |  ADITYA BIRLA SUN LIFE |  SBI |  UTI |  FRANKLIN TEMPLETON |  KOTAK MAHINDRA |  IDFC |  DSP |  AXIS |  TATA |  L&T |  SUNDARAM |  PGIM |  INVESCO |  LIC |  JM FINANCIAL |  BARODA PIONEER |  CANARA ROBECO |  HSBC |  IDBI |  INDIABULLS |  MOTILAL OSWAL |  BNP PARIBAS |  MIRAE ASSET |  PRINCIPAL |  BOI AXA |  UNION KBC |  TAURUS |  EDELWEISS |  NAVI |  MAHINDRA |  QUANTUM |  PPFAS |  IIFL |  Quant |  SHRIRAM |  SAHARA |  ITI