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What is the best dividend fund to invest in?

I want to get regular dividends on my investment. Please suggest a good dividend plan.

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6 Approved Answers

aniket

Investors looking for a regular source of income should opt for a Dividend Mutual Fund. In this Fund when the Net Asset Value of the fund reaches a certain value, the profit generated is distributed to its investors as dividend. Dividend funds are usually used as an option by investors in the higher age bracket looking for regular income. Young investors typically look for growth. In the growth option, the returns of your investment are invested back in the fund rather than being given to you as dividend. This allows investors to generate profits in the long run as the Net Asset Value rises.


A good Dividend Fund to invest in on Groww is ‘BNP Paribas Dividend Yield Fund – Growth’. The fund has, in the past, offered annualized return of 15.16% over a period of 3 years.This means that an investment of ₹1000 per month gives a yield of ₹95,870 in only five years. The fund has consistently outperformed its benchmark index, Nifty 500 across diverse time periods. The risk associated with the fund is lower as compared to the benchmark index. This makes the fund even more attractive. Though the minimum investment in this fund is only ₹500, a higher investment is recommended in order to be able to benefit better.


If you are comfortable with a little higher investment, Principal Dividend Yield Fund - Growth is a better suited scheme. With a minimum investment of ₹2000 per month, you would be able to draw ₹1,73,903 in five years at historical rate of return of 15.30% p.a. Also having outperformed Nifty 500, the major difference between this scheme and BNP Paribas Dividend Yield Fund – Growth is that this scheme has a higher risk exposure as compared to its benchmark. Thus, if you are comfortable with investing a marginally higher sum and taking some degree of risk in the short term to yield higher return in the future, you can invest in this fund. 


You can read here to further understand the process of investing in dividend funds through Groww.

Pijush Kanti Biswas

Dividend funds are mutual funds that primarily invest in companies that pay dividends, which are profits that companies share with stock shareholders. Dividends can be received as a source of income or they can be used to buy more units of the mutual fund.

These are some popular dividend funds available in market:

·      Tata Dividend Yield Fund - Regular 

·      BNP Paribas Dividend Yield Fund

·      Principal Dividend Yield Fund

Happy Investing!

 

Tanya

A dividend mutual fund is a fund that gives dividend from time to time. dividend funds start paying back much quicker than growth funds. People who are greatly dependent on a sum of money and yet want to mobilize it to earn money can opt for dividend mutual funds. This way, there is some form of capital protection while still getting regular dividends. Some such dividend funds are:

  • Tata Dividend Yield Fund
  • BNP Paribas Dividend Yield Fund
  • Principal Dividend Yield Fund
  • SBI Magnum Monthly Plan

Ankit

Dividend Mutual Funds are funds where dividends are given to investors at intervals by the Mutual Fund Company.

These funds are just like growth funds, except one difference. In case of growth funds, the earned amount gets reinvested by the mutual fund company whereas in case of dividend funds the amount is paid back to the investors at intervals.

Few important points regarding dividend funds are:

·     These funds are preferred by investors who are looking for a fixed income at regular intervals. Ex- aged people after retirement prefer to invest in these type of funds

·     Tax implication is one of the differentiating factors. Equity dividend funds are not taxable under section 10(23D) while the debt dividend funds are taxable. At the same time equity dividend funds will provide you higher returns, however they also carry higher risk with them.

·      Returns that an investor gets in these funds are lower compared to growth funds since here the amount does not get reinvested

·     The returns are also not given in fixed intervals

·     The dividends given are also not fixed

An alternate to investing in dividend fund is investing in Systematic Withdrawal Plan (SWP). In this a fixed amount can be withdrawal at fixed intervals. Moreover the frequency and amount of withdrawal can also be selected by the investor.

Few of the famous dividend funds are:

Vaneet

Dividend funds objective is to maximise the dividends for its investors. While all dividend funds strive to achieve this objective in the best possible manner, some of them are more preferred compared to others.

  • One of the differentiating factors is the tax implication.
  • Equity dividend funds are not taxable under section 10(23D)
  • Debt dividend funds are taxable.
  • Equity dividend funds will provide you higher returns, however risk is also higher in them.

On the basis of these considerations, below are some of the best dividend funds that you can consider:

  • SBI Magnum Monthly Income Plan - Floater - Monthly Dividend
  • BNP Paribas Dividend Yield Fund
  • Birla Sun Life Dividend Yield Plus Fund

You can read more about dividend funds on this link.

Kavita Soni

The objective of a dividend fund is nothing but to maximize the dividends for its investors. While all dividend funds strive to achieve this objective in the best possible manner, some of them are more preferred compared to others.

Tax implication is one of the differentiating factors. Equity dividend funds are not taxable under section 10(23D) while the debt dividend funds are taxable. At the same time equity dividend funds will provide you higher returns, however they also carry higher risk with them.

Based on these considerations, below are few best dividend funds that one should consider investing in:

  • SBI Magnum Monthly Income Plan - Floater - Monthly Dividend
  • BNP Paribas Dividend Yield Fund
  • Birla Sun Life Dividend Yield Plus Fund

For the reasons these funds are considered in best category, please read more here!

Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.
Past performance is not indicative of future returns. Please consider your specific investment requirements, risk tolerance, investment goal, time frame, risk and reward balance and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs.
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