Best Dividend Paying Mutual Funds in 2022-23 [India] | What is Dividend Paying Mutual-funds?
In case you like to make decent returns and newbie to the equity market then dividend yield mutual funds will be a good bet to start 2023. Therefore, in this article, we will let you know the Best Dividend Paying Mutual-funds 2022-23. Before we discuss the best dividend-paying mutual funds, let’s recap what dividend means and which type of companies pay dividends. In addition, we will cover How does dividend yield gets calculated so that you be assured of your net returns.
What is Dividend Paying Mutual-funds in 2022-23?
A dividend is a share of profits in the form of cash, reward, buyback, or otherwise that a company pays out to its shareholder. When a company generates enough profits after meeting all its expenses it can share these earnings with shareholders in the form of dividends. Owing to low-interest rates, retail investors should look at dividend-yielding mutual funds for tax efficiency & to lower volatility.
When you are new to the market and do not have enough knowledge then it’s better to take the route of mutual funds rather than investing directly in equity via the stock market. When you invest in mutual funds, then on behalf of you, these AMCs invest your money across different stocks as per the objective of the scheme laid out. In case you choose dividend yield funds, then these mutual funds companies will invest your money in the stocks of the companies that regularly declare dividends. As per Securities Exchange Board of India norms, dividend yield funds should allocate 65% of their portfolio to dividend-yielding instruments.
A company can only declare dividend year on year if it’s making sufficient profits when they are stable in the market. In addition, it comes with strong financials & excellent cash flow. However, dividends are not guaranteed and depend on company performance.
Also Read What is SBI Demat Account | How to Open Demat & Trading Account in SBI?
Dividend Yield
The dividend yield is a financial ratio that shows how much a company pays as a dividend or buyback each year relative to its stock price. In other words, the annual dividend declared per share divided by the share price is the dividend yield.
High dividend yield funds are suitable for those who looking for stable returns with low volatility. But during the bull or bear run the returns may get disturbed for established companies as well. It is recommended you should have limited exposure to such funds to diversify your portfolio. Investors can also take advantage of tax arbitrage by investing through mutual funds compared to direct investing in dividend-yielding stocks.
Also Read How to Open Demat Account in SBI-YONO?
Best Dividend Yield Mutual-Funds in 2022-23
Here is the curated list of the Best Dividend-yielding Mutual funds for 2022-23:
| Mutual Fund Scheme Name | AUM (Crores) | 1 Year Return | 3 Year Returns | 5 Year Returns | Expense Ratio |
| Templeton India Equity Income Fund – Direct – GrowthDividend Yield Fund | 1,229.57 | 41.63% | 24.24% | 18.42% | 1.65% |
| UTI Dividend Yield Fund – Direct Plan – GrowthDividend Yield Fund | 3,137.38 | 34.05% | 20.58% | 16.89% | 1.47% |
| ICICI Prudential Dividend Yield Equity Fund – Direct Plan – GrowthDividend Yield Fund | 609.56 | 48.89% | 20.40% | 15.80% | 1.39% |
| HDFC Dividend Yield Fund – Direct Plan | 2,833 | 44.18% | NA | NA | 0.35% |
| Aditya Birla Sun Life Dividend Yield Fund – Direct Plan – GrowthDividend Yield Fund | 869.54 | 35.20% | 19.14% | 12.65% | 1.69% |
| Tata Dividend Yield Fund – Direct Plan – GrowthDividend Yield | 633 | 16.56% | NA | NA | 0.74% |
| IDBI Dividend Yield Fund – Direct Plan – GrowthDividend Yield Fund | 100 | 29.99% | 22.87% | NA | 1.55% |
| Sundaram Dividend Yield Fund – Direct Plan – GrowthDividend | 245.78 | 31.55% | 20.60% | 18.31% | 2.17% |
After reading this article, if you have narrowed down your choice to a dividend yield mutual fund please do consider the fund with a decent corpus size, low historical volatility, and low expense ratio. Avoid making decisions purely on the returns please analyze the performance of these funds during bear and bull runs to limit your losses.
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