Before you make investment, you would want to know what are the average returns posted by that category of funds, particularly in the recent past. We zero in on dividend yield funds to dwell upon the returns these fund schemes posted in past one year and three years.
Dividend yield funds are a category of equity funds where investment is made in the stocks of companies that often announce dividends on their stocks. The chief objective of dividend yield mutual funds is to invest in stocks that offer regular dividends instead of capital appreciation.
Returns given by dividend yield funds: Two dividend yield funds that gave highest returns i.e., more than 20 percent per annum in past one year were ICICI Prudential Dividend Yield Equity Fund and Templeton India Equity Income Fund with 21.30 percent and 20.70 percent, respectively.
|Mutual Fund schemes||1-yr-return (%)|
|ICICI Prudential Dividend Yield Equity Fund||21.30|
|Templeton India Equity Income Fund||20.70|
(Source: AMFI, as on May 12, 2022)
At the same time, HDFC Dividend Yield Fund gave a return of 18.39 percent in the past one year, as on May 12, 2022.
ICICI Prudential DYF: Launched in May, 2014, ICICI Prudential Dividend Yield Equity Fund seeks to generate long term capital appreciation by primarily investing in dividend yielding stocks. At least 65 percent of the portfolio would be invested in dividend yielding stocks.
While the criterion of dividend-yield would be used to identify the investment universe from which the portfolio will be constructed, however, the fund house states that there will be a strong focus on selecting companies that have good corporate governance, strong fundamentals and growth prospects, good track record and consistency of dividend payments and low stock volatility.
The scheme is suitable for those investors who seek to invest in dividend yielding stocks along with potential capital appreciation. Investors willing to invest across all market caps can consider this scheme for investing.
High dividend yield stocks are more likely to help in limiting downside risk than other stocks in falling equity market. On the other hand, these stocks show good possibilities of capital appreciation in reviving market.
Templeton India Equity Income Fund: It is an open-ended equity scheme predominantly investing in dividend yielding stocks. The objective is to provide a combination of regular income and long-term capital appreciation by investing primarily in stocks that have a current or potentially attractive dividend yield, by using a value strategy.
Three-year returns: As far as past three-year returns are concerned, there is only one fund that gave a return of more than 20 percent. Templeton India Equity Income Fund gave a return of 21.45 percent in past three years.
|Fund scheme||3-year-return (%)|
|Templeton India Equity Income Fund||21.45|
|IDBI Dividend Yield Fund||17.42|
|ICICI Prudential Dividend Yield Equity Fund||16.72|
|Sundaram Dividend Yield Fund||15.63|
|UTI Dividend Yield Fund||15.38|
(Source: AMFI data; as on May 12, 2022)
However, there were several fund schemes under dividend yield fund category that gave a return greater than 15 percent in past three years. As we can see in the chart above, ICICI Prudential Dividend Yield Equity Fund gave a return of 16.72 percent, Sundaram Dividend Yield Fund gave a return of 15.63 percent, and UTI Dividend Yield Fund delivered a return of 15.38 percent and IDBI Dividend Yield Fund gave a return of 17.42.