Best Dividend Paying Mutual Funds in India

Dividend paying mutual funds are my favorite. I like them because it can generate short term income. Income from equity linked funds may not be as predictable as debt funds. But I still prefer equity linked funds to generate income in short term. Equity linked dividend yielding funds has potential to grow dividends exponentially over time.

But why not buy stocks directly and earn dividends? Dividend income generation from direct stocks is not as easy as its is from dividend paying mutual funds.

It is not simple to identify stocks that can pay consistently higher dividends for next 20 years. Of course, experts buy direct stocks for dividends, but for non-experts mutual funds is a better alternative.

Identification of a good dividend paying stocks requires digging into financial statement. Not many people has time and know-how to do it. Mutual fund is the most reliable alternative to direct stocks investment. Equity linked dividend paying mutual funds invests directly in stocks.

Objective of dividend paying mutual fund is to maximize the dividend yield for investors.

Dividend Yield of Mutual Fund


Suppose a company X which has market price of $20 per share. The company decided to distribute $2 per share as dividend. In this case the dividend yield will be 10%.

By a rule of thumb, any dividend yield above 3.5% can be considered as reasonable. Investors must keep this in mind that only blue chip companies (companies with strong fundamentals) can pay consistently high dividends.

Mutual Fund distributes dividends among its unit-holders from the profit it makes on redemption. Dividend paying mutual funds shares its profits on regular basis with its unit-holders.

Investors who buys dividend paying funds need not worry about which stocks to buy and when to sell. They can simply focus on one mutual fund and keep buying it time and again.

Within that mutual fund, its fund managers job to buy good stocks which will ensure consistent dividend income for investors.

What we have here about high dividend paying mutual funds :

* How to calculate dividend yield.
* How dividend mutual funds are not for growth investors.
* How dividend is paid by mutual funds to individual investors.
* Taxation of dividend earned from mutual funds.
* List of high dividend paying mutual funds.

Dividend Mutual Funds & growth investing

NAV of Dividend paying mutual funds does not appreciate over time. People who think that they will gain dual advantage from dividend yielding funds will not be true.

Capital appreciation does not happen in dividend yielding funds. It generates decent short term income in form of dividends. But capital appreciation gets compromised while paying regular dividend.

Mutual fund that has dividend plan, distributes dividends from profit they make. Hence as soon as dividend is paid, NAV of funds fall.

A non-dividend paying fund, will instead use their booked-profits to buy additional value stocks/assets. A non-dividend paying fund can give higher capital appreciation benefits.

A dividend fund can give higher short term income.

How dividend is paid by Mutual Funds…

Growth linked mutual funds invests with objective of capital appreciation.

Dividend linked mutual funds invests with objective of dividend payment.

Dividend is paid from the profit made by the fund in last one year (say). If there is no profit there will be no dividend disbursement.

Dividend can be credited directly to investors bank account.

For this the investors must select the ‘dividend payout’ option instead of ‘dividend reinvest’ option.

In case of dividend reinvest option (growth), the reinvested amount is used to buy more units at prevailing NAV. In this case the investor will see the number of units growing. But there will be no cash in-flow in short term.

Dividend earnings from mutual fund are?

Dividend earning from equity linked mutual fund is not taxable specified under section 10(23D).. To know whether a fund is equity linked or debt linked, one must know its portfolio composition. If weightage of equity in portfolio more than 65%, the fund is equity linked.

Dividend yield from mutual funds are assured?

Dividend earning from mutual funds is not assured. If mutual fund NAV has appreciated, only then fund managers will decided to distribute profits. Hence, in case of bullish market, one may fund that dividend payout is more predictable.

Dividend funds yields higher returns or growth funds?

In long term, returns of both funds will be similar. In dividend payout option, money is credited to investors bank account. To further increase the returns, investor must re-invest this money. It is very important to keep this cash rolling.

Best Dividend Paying Mutual Funds in India

(Updated as on Aug’2017)

Fund Rating, Asset Size, Expense Ratio etc.

Rank Mutual Funds VR Rating NAV (Rs.) Expense Ratio Asset (Rs.Crore)
1 Franklin India Bluechip Fund (D) 3 42.5314 2.21% 8,962
2 Birla Sun Life Top 100 Fund (D) 4 17.2582 2.26% 2,985
3 Realince Vision (D) 3 47.2806 2.03% 3,383
4 DSP BlackRock Equity Fund - Regular Plan (D) 2 35.279 2.41% 2,459
5 Franklin India Prima Fund (D) 4 63.1596 2.31% 5,980
6 Franklin India Flexi Cap Fund (D) 5 17.6971 2.29% 2,922
7 Kotak 50 - Regular Plan (D) 4 36.445 2.17% 1,366
8 Franklin India Prima Plus Fund (D) 4 39.8296 2.22% 11,561
9 ICICI Prudential Value Discovery Fund (D) 4 32.02 2.11% 17,232
10 HDFC Long Term Advantage Fund (D) 3 42.914 2.24% 1,526
11 SBI Magnum Tax Gain Scheme (D) 3 44.7584 2.00% 5,661
12 Birla Sun Life Frontline Equity Fund (D) 5 28.66 2.14% 17,770
13 SBI Magnum Equity Fund (D) 4 31.8605 2.10% 2,055
14 Reliance Growth Fund - Retail Plan (D) 2 69.4464 1.99% 6,713
15 HDFC Equity Fund (D) 2 55.633 2.11% 20,350
16 HDFC Capital Builder (D) 3 28.72 2.44% 1,723
17 HDFC Top 200 Fund (D) 3 53.998 1.99% 15,361
18 ICICI Prudential Dynamic Plan (D) 3 23.3087 2.18% 6,643
19 Reliance Equity Opportunities Fund - Retail Plan (D) 2 31.3455 1.98% 10,065
20 DSP BlackRock India T.I.G.E.R. Fund - Regular Plan (D) 3 19.504 2.55% 1,646
21 Axis Long Term Equity Fund 5 22.2029 1.97% 14,378
22 IDFC Premier Equity Fund - Regular Plan (D) 2 34.21 2.00% 5,908
23 UTI Mastershare (D) 3 34.4882 2.14% 4,196
24 UTI Top 200 2 34.0662 2.41% 893

Dividend Yield

Rank Mutual Funds Dividend Yield % (Lates) Dividend Yield % (5Y Avg) Dividend Yield % (10Y Avg) Dividend Yield % (inception)
1 Franklin India Bluechip Fund (D) 8.23% 9.17% 9.52% 8.67%
2 Birla Sun Life Top 100 Fund (D) 11.07% 11.50% 9.69% 9.60%
3 Realince Vision (D) 8.99% 8.35% 8.83% 13.85%
4 DSP BlackRock Equity Fund - Regular Plan (D) 15.02% 14.85% 13.55% 11.80%
5 Franklin India Prima Fund (D) 9.50% 8.23% 8.87% 7.92%
6 Franklin India Flexi Cap Fund (D) 8.48% 8.76% 10.03% 10.48%
7 Kotak 50 - Regular Plan (D) 4.12% 10.02% 9.40% 8.41%
8 Franklin India Prima Plus Fund (D) 6.28% 6.28% 8.16% 8.59%
9 ICICI Prudential Value Discovery Fund (D) 9.68% 8.14% 6.38% 7.24%
10 HDFC Long Term Advantage Fund (D) 8.74% 8.74% 9.32% 10.22%
11 SBI Magnum Tax Gain Scheme (D) 8.94% 9.16% 8.64% 8.64%
12 Birla Sun Life Frontline Equity Fund (D) 0.00% 8.63% 6.93% 9.74%
13 SBI Magnum Equity Fund (D) 6.28% 10.36% 9.10% 6.83%
14 Reliance Growth Fund - Retail Plan (D) 10.08% 8.06% 7.20% 8.64%
15 HDFC Equity Fund (D) 8.99% 8.27% 7.82% 6.81%
16 HDFC Capital Builder (D) 10.45% 9.58% 9.23% 8.99%
17 HDFC Top 200 Fund (D) 8.33% 7.78% 7.59% 7.18%
18 ICICI Prudential Dynamic Plan (D) 4.42% 7.40% 8.64% 9.28%
19 Reliance Equity Opportunities Fund - Retail Plan (D) 9.57% 9.09% 6.78% 6.31%
20 DSP BlackRock India T.I.G.E.R. Fund - Regular Plan (D) 8.72% 8.61% 9.05% 11.10%
21 Axis Long Term Equity Fund 10.04% 6.74% 5.22% 5.22%
22 IDFC Premier Equity Fund - Regular Plan (D) 6.78% 8.94% 7.80% 7.80%
23 UTI Mastershare (D) 0.00% 6.26% 6.70% 6.00%
24 UTI Top 200 7.34% 5.28% 5.64% 5.75%

Dividend Payment History (years)

Rank Mutual Funds NAV (Rs.) Dividend Yield % (since inception) History of Dividend Paid in Past Years
1 Franklin India Bluechip Fund (D) 42.5314 8.67% 1997, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017
2 Birla Sun Life Top 100 Fund (D) 17.2582 9.60% 2007, 2008, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017
3 Realince Vision (D) 47.2806 13.85% 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017
4 DSP BlackRock Equity Fund - Regular Plan (D) 35.279 11.80% 1999, 2000, 2003, 2004, 2005, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017
5 Franklin India Prima Fund (D) 63.1596 7.92% 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017
6 Franklin India Flexi Cap Fund (D) 17.6971 10.48% 2006, 2007, 2008, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017
7 Kotak 50 - Regular Plan (D) 36.445 8.41% 1999, 2000, 2001, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017
8 Franklin India Prima Plus Fund (D) 39.8296 8.59% 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017
9 ICICI Prudential Value Discovery Fund (D) 32.02 7.24% 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017
10 HDFC Long Term Advantage Fund (D) 42.914 10.22% 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017
11 SBI Magnum Tax Gain Scheme (D) 44.7584 8.64% 1995, 1996, 1999, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017
12 Birla Sun Life Frontline Equity Fund (D) 28.66 9.74% 2003, 2004, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016
13 SBI Magnum Equity Fund (D) 31.8605 6.83% 1993, 1994, 1995, 1996, 1997, 1999, 2000, 2003, 2006, 2007, 2009, 2011, 2012, 2014, 2015, 2016, 2017
14 Reliance Growth Fund - Retail Plan (D) 69.4464 8.64% 2000, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017
15 HDFC Equity Fund (D) 55.633 6.81% 1999, 2000, 2002, 2003, 2004, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017
16 HDFC Capital Builder (D) 28.72 8.99% 2000, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017
17 HDFC Top 200 Fund (D) 53.998 7.18% 2000, 2001, 2002, 2003, 2004, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017
18 ICICI Prudential Dynamic Plan (D) 23.3087 9.28% 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017
19 Reliance Equity Opportunities Fund - Retail Plan (D) 31.3455 6.31% 2006, 2007, 2008, 2009, 2011, 2012, 2013, 2014, 2015, 2016, 2017
20 DSP BlackRock India T.I.G.E.R. Fund - Regular Plan (D) 19.504 11.10% 2005, 2006, 2007, 2008, 2009, 2010, 2012, 2013, 2014, 2015, 2016, 2017
21 Axis Long Term Equity Fund 22.2029 5.22% 2010, 2012, 2014, 2015, 2016, 2017
22 IDFC Premier Equity Fund - Regular Plan (D) 34.21 7.80% 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017
23 UTI Mastershare (D) 34.4882 6.00% 1991, 1992, 1993, 1994, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015
24 UTI Top 200 34.0662 5.75% 1999, 2001, 2002, 2003, 2004, 2005, 2007, 2009, 2010, 2011, 2013, 2015, 2016, 2017

Dividend Payment Efficiency & Age of Fund

Rank Mutual Funds NAV (Rs.) Age of Fund (max 22 years) No of yrs dividend paid Dividend payment efficiency
1 Franklin India Bluechip Fund (D) 42.5314 20 20 100.00%
2 Birla Sun Life Top 100 Fund (D) 17.2582 11 11 100.00%
3 Realince Vision (D) 47.2806 15 15 100.00%
4 DSP BlackRock Equity Fund - Regular Plan (D) 35.279 19 16 84.21%
5 Franklin India Prima Fund (D) 63.1596 19 19 100.00%
6 Franklin India Flexi Cap Fund (D) 17.6971 12 12 100.00%
7 Kotak 50 - Regular Plan (D) 36.445 19 18 94.74%
8 Franklin India Prima Plus Fund (D) 39.8296 19 19 100.00%
9 ICICI Prudential Value Discovery Fund (D) 32.02 13 13 100.00%
10 HDFC Long Term Advantage Fund (D) 42.914 13 13 100.00%
11 SBI Magnum Tax Gain Scheme (D) 44.7584 9 9 100.00%
12 Birla Sun Life Frontline Equity Fund (D) 28.66 15 13 86.67%
13 SBI Magnum Equity Fund (D) 31.8605 22 14 63.64%
14 Reliance Growth Fund - Retail Plan (D) 69.4464 18 16 88.89%
15 HDFC Equity Fund (D) 55.633 19 17 89.47%
16 HDFC Capital Builder (D) 28.72 18 15 83.33%
17 HDFC Top 200 Fund (D) 53.998 18 17 94.44%
18 ICICI Prudential Dynamic Plan (D) 23.3087 13 13 100.00%
19 Reliance Equity Opportunities Fund - Retail Plan (D) 31.3455 12 11 91.67%
20 DSP BlackRock India T.I.G.E.R. Fund - Regular Plan (D) 19.504 13 12 92.31%
21 Axis Long Term Equity Fund 22.2029 8 6 75.00%
22 IDFC Premier Equity Fund - Regular Plan (D) 34.21 9 9 100.00%
23 UTI Mastershare (D) 34.4882 22 21 95.45%
24 UTI Top 200 34.0662 19 14 73.68%

 

Conclusion

We have already seen that value investors will prefer these best dividend paying mutual funds over other funds. The reason being short term income as dividends and also capital appreciation. An investors who wish to start the process of investing through value investing route, may well consider investing in the best dividend paying mutual funds as their starting point.





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I am a Blogger with a passion for investment education. I started blogging in 2007-08. Blogging didn’t happened to me as a coincidence, it was a conscious decision. The idea with which I started blogging still stands true. In my starting days my finances remained tight. I was reading heavily about how to manage finance. One day I got hold of a book which my father gifted me in 2003. It was stacked below my graduation books. It was a small-thin book with its cover named "Rich Dad Poor Dad".....more

25 Comments on "Best Dividend Paying Mutual Funds in India"

  1. R Gopalakrishnan | September 9, 2017 at 4:00 am | Reply

    I want to take two MFs each of Rs 5 L. Conditions
    1. I should get very good annual dividend every year., say 12 to 15 %
    2 Their track record of paying dividends for the last three years should be better than what it is the present
    3 Dividend payment should be due any time from November this year to March end 2018
    4 No SIP please
    Regards

  2. Thanks for this blog…outstanding.

    • Mohanakrishnan | August 29, 2017 at 2:10 pm | Reply

      I believe that Franklin India High Growth Companies Fund has good dividend paying potential in the years to come. Please analyse this scheme as well in your next update. Thanks

  3. Why not you mention monthly dividend mutual fund name sir

  4. VIKUL PATEL | May 10, 2017 at 2:45 pm | Reply

    I am 55 years and most of my money is in FDs. I invested RS 10 lakhs in 7.8% and FDs. I guess it should be possible to secure about 12% income annually on actual investment with moderate risk.

    Can you suggest two or three such investments?

  5. Suresh Kumar T | February 3, 2017 at 10:23 pm | Reply

    Let me know about the best five monthly dividend paying Mutual Funds with their monthly performance track for two years. I wish to have a monthly Dividend of Rs.5000/-. I hope the information will help me to decide the size of required one time investment.

  6. Nice educative information and data. But as far as dividend yield is concerned it is not know how the same is arrived at whether it is on latest dividend and NAV?

  7. Wonderful.. Thanks. Keep it up.. I have subscribed recently, but I haven’t got any acknowledge.

  8. SEND ME NAME OF MUTUAL FUND WHICH IS GIVING MONTHLY DIVINEND

  9. A Visweswara Rao | November 19, 2016 at 9:50 pm | Reply

    I am 70 years and most of my money is in FDs. I invested Rs.30 lakhs in Jeevan Akshyay with yield of 7.8% and FDs are about Rs.80 lakhs (average yild of 8-9%. I propose to divert about Rs.25 lakhs to mutual funds. I guess it should be possible to secure about 12% income annually on actual investment with moderate risk.

    Can you suggest two or three such investments?

  10. High yield bonds | November 10, 2016 at 8:30 pm | Reply

    It’s hard to find knowledgeable people for this subject, however, you seem like you know what you’re talking about!
    Thanks

  11. I am 73 years old. I have about Rs 250000 to invest . please suggest how much I should in debt fund, balance fund and equity fund, to have maximum return on the same in investment

  12. Very nice , unbelievable.

  13. Nizarali Mahesania | September 27, 2016 at 8:33 pm | Reply

    Sir, which mutual fund is better Growth, dividend payout or dividend reinvestmentplan

  14. Anis Mohiuddin | July 19, 2016 at 7:49 pm | Reply

    Hi, I am 68 and need to buy a small car for which there will be an EMI of about 9000/- which I wish to cover with a monthly dividend pay out MF scheme with a suitable one time investment. Can you suggest something to suit my need. I have found out that HDFC Prudence Fund has been paying regular monthly dividend of about 30p per unit and at present unit NAV stands at Rs. 33.32 (Direct plan) but regular plan NAV stands at 29.34. I will wait to receive your advice before deciding. Thanks.

  15. nice post. good to know many things.

  16. Hi,
    I am influenced by the post updated in http://www.getmoneyrich.com/high-dividend-paying-mutual-funds/.
    My requirement is that investing through SIP under ELSS and from that get some good returns as my investment will be more than 5 years as of now and investment amount per month would be around Rs.2000 to Rs.3000. Kindly let me know where can i see the best dividends details also if some stocks which provides good dividends even if they dont false under ELSS.

  17. Hello! I’ve been reading your website for a while now
    and finally got the bravery to go ahead and give you a shout out from
    Dallas Tx! Just wanted to tell you keep up the good job!

  18. mohsin khan | June 8, 2015 at 2:24 am | Reply

    Feedback
    it is humble request to all AMC and all online investment platforms brokers and sub brokers
    please send yearly one statement on paper at address registered with you
    because we are mostly invest online if suddenly something happened to us accidentally then family members dont know about our online investment and you send statements on e-mail id it is have password how family members know how many amount in how many folios we have ?
    Because all AMC do not have their offices in every city’s of Maharashtra or other state in india
    if i accidentally death where to go my family members and nominated person to transferred all fund or redeem all fund on his/her name
    Request to you please send one yearly hard copy of all investment online or offline PAN number base send on registered address most important which contains how to nominee redeem or transferred all investment on nominated person and clear maintains all processes all foms all documents details to help nominated person or families
    Because nominee or families do not worried about what to do ????

  19. Hello there! I could have sworn I’ve been tto this website
    before but aftyer browsing through some of the articles I realized it’s new to me.

    Regardless, I’m definitely pleased I found it and
    I’ll be book-marking itt and checking back frequently!

  20. Great post .

    I want to know the dividend paying mf of ELSS scheme . Its better if you give me reference from which site I can get the dividend yield data.

    I was influenced by the post . so searching for it . Also let me know your views

  21. my question is if one can opt for best large cap funds with dividend payout option to earn high dividends

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