Similar to stocks that offer dividend to its investors from the company's profits, there are dividend yield mutual funds. Dividend income is an income over and above the NAV appreciation in case of mutual funds. While, dividend income for a mutual fund is not ensured, the nomenclature of the fund category largely specifies fund manager's chosen strategy of providing regular income to its investors as dividend income.
Here for your reference we provide you with all the inputs regarding dividend yield mutual funds:
Advantages of Dividend yield paying mutual funds
These are less risky in comparison to the equity category.
Aim to provide a regular stream of payment to its investors and are best suited for retired folks who seek safe revenue source.
So, if you are considering to get dividend income by investing in mutual funds, here are some of the best ones, you can consider for investment:
Best Dividend Yield Fund With Their SIP Performance (Absolute Returns)
|Dividend Yield Funds||AUM||NAV as on May 28||1 year||3 year||5 year|
|Principal Dividend Yield Fund- Growth||Rs. 201 crore||74.21||26%||38%||50%|
|UTI Dividend Yield Fund- Growth||Rs. 2624 crore||90.78||28%||39%||49%|
|Aditya Birla Sun Life Dividend Yield Fund-Regular Plan||Rs. 741 crore||218||28%||37%||37%|
1. Principal Dividend Yield Fund- Growth:
The mutual fund by Principal mutual fund house is categorized a Thematic-Divided Yield fund from the equity category. The fund typically invests in stocks with a high dividend yield i.e. the amount of dividend paid in comparison to the stock's market price.
SIP in the fund can be started with as less as Rs. 500 while the lump sum fund investment has to be for Rs. 5000. Not to ignore this is a CRISIL 3-star rated fund.
The fund announced the most recent dividend for which the record date was December 17, 2020.
Top holdings of the fund are in Infosys, TCS, Reliance Industries, UltraTech Cement, Navin Fluorine, ICICI Bank etc.
2. UTI Dividend Yield Fund- Growth:
The fund carries an expense ratio of over 2 percent. SIP in the fund can be started for Rs. 500 per month. Benchmark of the fund is NIFTY Div Opps 50 TRI.
Top holdings of the fund are Infosys, Tech Mahindra, HUL, ITC, Tata Steel, Mphasis etc. The fund declared the last dividend for which the record date was of March 22, 2021.
3. Aditya Birla Sun Life Dividend Yield Fund-Regular Plan- Growth:
The expense ratio of the fund is 2.5 percent. Also, the SIP in the fund can be started for Rs. 500. The fund's investments are into ITC, L&T Infotech, ITC, NTPC, LVMH Louis Vuitton, Starbucks etc.
Taxation of dividend yield mutual funds:
If the held units of the mutual funds are sold after a holding period of 1 year, then gains over Rs. 1 lakh per financial year are taxed at 10% rate. Gains up to Rs. 1 lakh are exempt from tax implication.
In a case if the units are sold within one year of adding the investment, then gains are taxed at 15 percent rate.
In respect of the dividends earned:
Dividend earned by the investor are added to his or her income and taxed as per taxpayer's slab rate. Note if the dividend income for the FY exceeds Rs. 5000 then AMC also deducts the TDS at the rate of 10 percent before paying off the dividend.