Best dividend yielding mutual funds to invest in India in 2021


oi-Roshni Agarwal


Similar to stocks that offer a dividend to its investors out of the company’s earnings, there are dividend mutual funds. Dividend income is income that is in addition to appreciation in net asset value in the case of mutual funds. Although dividend income for a mutual fund is not guaranteed, the nomenclature of the fund category largely specifies the strategy chosen by the fund manager to provide regular income to its investors in the form of dividend income.

3 Best Dividend Yield Mutual Funds to Invest in India in 2021

For your information, we provide you here with all the information about dividend mutual funds:

Benefits of dividend yielding mutual funds

These are less risky compared to the equity category.

Aims to provide a steady stream of payment to its investors and is best suited for retirees looking for a secure source of income.

So, if you are thinking of earning dividend income by investing in mutual funds, here are some of the best that you can consider investing:

BIs Dividend Yield Fund with their SIP performance (absolute returns)

Dividend Yield Fund AT M NAV as of May 28 1 year 3 years 5 years
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%
Sun Life Aditya Birla Dividend Yield Fund – Regular Plan Rs. 741 crore 218 28% 37% 37%

1. Primary Dividend Yield Fund – Growth:

The leading mutual fund house’s mutual fund is classified under the thematic split-return fund category of the equity category. The fund generally invests in stocks with a high dividend yield, that is, the amount of dividend paid in relation to the stock market price.

The SIP in the fund can be started with as less than Rs. 500 while the lump sum fund investment should be Rs. 5000. Do not ignore this is a 3 star CRISIL rated fund.

The fund announced the most recent dividend for which the record date was December 17, 2020.

The main 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 has an expense ratio of over 2 percent. The SIP in the fund can be started for Rs. 500 per month. The fund’s benchmark is NIFTY Div Opps 50 TRI.

The main holdings of the fund are Infosys, Tech Mahindra, HUL, ITC, Tata Steel, Mphasis, etc. The fund declared the last dividend for which the registration date was March 22, 2021.

3. Sun Life Aditya Birla Dividend Yield Fund – Regular Plan – Growth:

The fund’s expense rate is 2.5%. Also, the SIP in the fund can be started for Rs. 500. The fund’s investments are made in ITC, L&T Infotech, ITC, NTPC, LVMH Louis Vuitton, Starbucks, etc.

Taxation of dividend mutual funds:

Capital gains:

If the units held in mutual funds are sold after a 1 year holding period, the gains are greater than Rs. 1 lakh per exercise is taxed at the rate of 10%. Earnings up to Rs. 1 lakh are exempt from any tax implications.

In a case where the units are sold within one year of adding the investment, the gains are taxed at the rate of 15%.

For dividends earned:

Dividends earned by the investor are added to his income and taxed at the rate of the taxpayer’s bracket. Note if the dividend income for the year exceeds Rs. 5000 then AMC also deducts the TDS at the rate of 10 percent before paying the dividend.

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