Do you want a mutual fund scheme that gives you regular income along with investment? If yes, then dividend yield mutual funds can be the right choice for you. These funds invest in companies that give a part of their profits to investors in the form of dividends. That is, you get not only capital growth on your investment but also regular income from time to time.
What are dividend yield mutual funds?
Dividend yield mutual funds mainly invest in shares of companies that give regular dividends. Such companies usually have strong balance sheets and stable business models, due to which their performance remains stable despite high volatility in the market.
In the short term (1, 3, 6 months), almost all mutual fund categories have given average negative returns. If we look at 1-year average returns of small-cap, mid-cap, large-cap, and other key categories, most of them struggled to touch even 5%.
Since September 2024, the Indian equity market has witnessed multiple bouts of selloff, sending broader indices like BSE small-cap and mid-cap down 23% and 21%, respectively. Instead of tracking their short-term performances, the story will review the returns of dividend-yield funds based on their 5-year yields.
In the last five years, some dividend-yield mutual funds have performed brilliantly and have given investors good returns as well as stable income.
Also read: Top 5 mutual funds with up to 42% CAGR in 5 yrs: Smallcaps win! Rs 10K SIP becomes Rs 12.42 lakh
Here are the top 5 dividend-yield mutual funds that did not disappoint investors:
1. ICICI Prudential Dividend Yield Equity Fund – Direct Plan
5-year annualised returns : 28.85%
Launch date: 16 May 2014
Benchmark: NIFTY 500 TRI
Assets under management (AUM): Rs 4,575 crore
2. Templeton India Equity Income Fund – Direct Plan
5-year annualised returns: 25.74%
Launch date: 1st January 2013
Benchmark: NIFTY 500 TRI
Assets under management (AUM): Rs 2,341 crore
3. Aditya Birla Sun Life Dividend Yield Fund – Direct Plan
5-year annualised returns: 22.75%
Launch date: 1st January 2013
Benchmark: NIFTY 500 TRI
Assets under management (AUM): Rs 1,339 crore
4. LIC MF Dividend Yield Fund – » Read More
