Dividend refers to the part of the profit which a company shares with its shareholders. A dividend yield fund is a mutual fund which invests in shares/stocks of companies that pay high dividends. Since companies can afford to pay high dividends only if they have substantial profits to distribute, typically dividend yield funds tend to invest almost exclusively in high-quality stocks with a proven track record.

Here’s a List of the Best 5 Dividend Yield Funds:

Returns
Fund Name AUM (Cr) 1-Year 3-Year 5-Year
UTI Dividend Yield Fund – Direct Plan 2,317.52 -6% 7% 7%
UTI Dividend Yield Fund 2,317.52 -7% 7% 6%
Templeton India Equity Income Fund – Direct Plan 910.14 -7% 7% 7%
Templeton India Equity Income Fund 910.14 -7% 6% 7%
Aditya Birla Sun Life Dividend Yield Fund – Direct Plan 726.45 -14% 1% 4%
Aditya Birla Sun Life Dividend Yield Fund – Regular Plan 726.45 -15% 0% 3%
Principal Dividend Yield Fund – Direct Plan 187.99 -10% 8% 8%
Principal Dividend Yield Fund 187.99 -11% 7% 7%
ICICI Prudential Dividend Yield Equity Fund – Direct Plan 170.15 -12% 4% 6%
ICICI Prudential Dividend Yield Equity Fund 170.15 -13% 4% 5%
IDBI Dividend Yield Fund – Direct Plan 103.94
IDBI Dividend Yield Fund – Regular Plan 103.94

1. Aditya Birla Sun Life Dividend Yield Fund

Instrument 1 Year Return 3 Year Return 5 Year Return
Aditya Birla Sun Life Dividend Yield Fund -15.40% 2.01% 5.23%
Category -9.81% 6.48% 7.98%

(Data as on August 10, 2019)

Aditya Birla Sun Life Dividend Yield Fund is currently the oldest dividend yield fund in the space and was launched in February 2003. The scheme has given reasonably good medium and long term returns of 2.01% and 5.23% over the last 3 year and 5 year periods respectively.

However, the scheme’s returns have remained lower than the returns generated by its benchmark. It is a relatively aggressive fund which has allocated significant portions of its assets to mid-cap and small-cap companies, which are relatively more responsive to market movements. It has allocated around 48% of its assets to large caps, 33.13% to mid-caps and 17.87% to small caps (as on August 10, 2019).

The scheme has given maximum exposure of its assets to equity (96.17), 2.07% in the Cash and cash equivalents and 1.76% in the debts. The top 3 company holdings of the scheme are Infosys (5.82%), ITC (3.77%) and Coal India (3.11%). It is definitely still one of the best dividend yield funds in India today and suitable for investors with moderate risk appetite.

2. ICICI Prudential Dividend Yield Equity Fund

Instrument 1 Year Return 3 Year Return
ICICI Prudential Dividend Yield Equity Fund -11.79% 5.65%
Category -9.81% 6.48%

(Data as on August 10, 2019)

ICICI Prudential Dividend Yield Equity Fund is a relatively new entrant in the dividend yield funds category and was launched in May 2014. However, in this short span of less than 5 years, it has managed to attract the attention of investors and analysts alike. As one of India’s best dividend yield funds in 2019, it has generated an attractive return of 5.65% over the last 3 year period.

As on August 10, 2019, the scheme has allocated around 60% of its assets to large caps and nearly 28% each to mid and small-cap scrip. The asset allocation of the scheme across market capitalization reflects that it follows an aggressive investment strategy. In the sector-wise allocation of funds also, the scheme follows an aggressive approach as it has given a higher weightage to consumption-driven sectors like finance and power than defensive sectors such as pharmaceuticals.

ICICI Prudential Dividend Yield Equity Fund is suitable for investors who are looking for an aggressive equity fund which with high-quality investments and a good track record.

3. Principal Dividend Yield Fund

Instrument 1 Year Return 3 Year Return 5 Year Return
Principal Dividend Yield Fund -8.49% 9.29% 10.05%
Category -9.81% 6.48% 7.98%

(Data as on August 10, 2019)

Principal Dividend Yield Fund is one of the veterans of the category which made its debut nearly 15 years ago in October 2004. This is currently one of the best dividend yield funds of 2019 and has given better returns than its benchmark in both 3 year and 5 year periods.

It is a relatively conservative dividend yield fund which has given maximum exposure to large-cap stocks in its portfolio. It has allocated around 68.20% of its assets to large caps, 14.28% to mid-caps and 17.53% to small caps (as on August 10, 2019).

However, in the sector-wise allocation of its funds, the scheme follows a relatively aggressive approach as it has invested more in cyclical sectors like banking and automobiles than defensive sectors like software. Principal Dividend Yield Fund is definitely a top pick in not just the dividend yield funds category but also in the larger equity funds category too.

4. Templeton India Equity Income Fund

Instrument 1 Year Return 3 Year Return 5 Year Return
Templeton India Equity Income Fund -7.58% 7.34% 8.82%
Category -9.81% 6.48% 7.98%

(Data as on August 10, 2019)

Templeton India Equity Income Fund, launched in 2006, is a category veteran and continues to be a popular investment choice among Indian equity investors. The key reason for including this scheme in the 2019 list of best dividend yield funds are its staggering returns of 7.34% and 8.82% posted by it over the last 3 year and 5 year periods respectively.

However, it has not succeeded in outperforming its benchmark returns during the previous two tenures. The scheme has allocated around 46.60% of its assets to large-cap companies and another 35.51% to mid-cap companies.

The small-cap holding of the scheme stands at around 17.79%. As far as sector-wise allocation of its funds is concerned, this scheme has given its maximum assets into equity (98.46%) and the rest 1.54% in Cash and cash equivalents. Templeton India Equity Income Fund is a relatively aggressive dividend yield fund which has the potential of giving extraordinary returns to investors.

5. UTI Dividend Yield Fund

Instrument 1 Year Return 3 Year Return 5 Year Return
UTI Dividend Yield Fund -5.80% 8.12% 8.40%
Category -9.81% 6.48% 7.98%

(Data as on August 10, 2019)

UTI Dividend Yield Fund is another category veteran which was launched by India’s oldest fund house, UTI Mutual Fund in May 2005. The scheme has performed impressively over the last 3 year and 5 year periods wherein it generated returns of 8.12% and 8.40% respectively.

It is a relatively conservative dividend yield fund which has invested a majority of its assets (65.74%) in large-cap companies, potential the safest equity investments as of January 2019. Additionally, the scheme has allocated 29.48% to mid-caps and 4.79% to small-cap investments.

The top 3 company holdings of the scheme are Infosys (9.48%), Tata Consultancy (6.25%) and ITC (5.54%). An investor looking for the best dividend yield funds in India should definitely consider investing in the UTI Dividend Yield Fund in light of its proven track record and high-quality blue-chip investments.

Difference between Dividend Yield and Dividend Option

An investor must not confuse a dividend yield fund with the dividend option of mutual funds. The dividend option of a mutual fund simply means than an investor chooses to receive his/her mutual fund returns in the form of periodic dividend payouts.

The alternative to the dividend option is the growth plan of a mutual fund using which an investor gets capital appreciation in the value of his/her holding of mutual fund units. But as discussed earlier, the dividend yield type of scheme targets a specific type of mutual investments. Thus, every mutual fund, including dividend yield funds, comes in two varieties – dividend and growth.

The post 5 Best Dividend Yield Funds in 2019 appeared first on Compare & Apply Loans & Credit Cards in India- Paisabazaar.com.



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