Top 5 Dividend Paying Mutual Funds in India: Some investors are on the lookout for a regular income stream from their investments along with capital appreciation. They either go for high dividend-yield companies or dividend-paying mutual funds. While the universe of high-dividend stocks is well known, in this article we’ll discuss the top 5 dividend paying mutual funds in India.

Top Dividend Paying Mutual Funds In India

For putting together a list of the top 5 Dividend Paying mutual funds in India, we compared the funds across key parameters such as 3-yr annualized returns, expense ratios, assets under management, and more. Without further ado, let us jump in.

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Top 5 Dividend Paying Mutual Funds In India #1 – HDFC Dividend Yield Fund

Top Dividend Paying Mutual Funds - HDFC Mutual Fund Logo
Fund CompanyHDFC Asset Mgmt. Co.Size (AUM in Rs Cr)3,015
3-yr returns (CAGR)NA1-yr return13.18%
Expense ratio0.44%Inception DateDecember 18, 2020
Exit Load (after 1-yr)0%#Stocks Held72

HDFC Dividend Yield Fund is the largest dividend-paying mutual fund with an AUM of Rs 3,015 crore. It was launched in December 2020 and has grown fast in the last two years. It is being managed by Mr. Gopal Agrawal since its inception. He holds more than 17 years of work experience in asset management and 2 years in stock research. 

The fund owns 72 stocks in its portfolio with the top ten companies accounting for 40.87% of the total assets owned. The fund’s 3-yr return data is not available although. Nevertheless, its performance has been impressive with a 13.18% return for its investors in the last 12 months.

The expense ratio of the direct plan of the HDFC Dividend Yield Fund stands at 0.44%. Its top three holdings are ITC (5.67%), Infosys (5.09%), and Hindustan Unilever (4.96%). Among the top dividend-paying funds, it has the highest allocation of 99.37% of its funds into stocks.

Top 5 Dividend Paying Mutual Funds In India #2 – UTI Dividend Yield Fund

Top Dividend Paying Mutual Funds - UTI Mutual Fund Logo
Fund CompanyUTI Asset Mgmt. Co.Size (AUM in Rs Cr)2,821
3-yr returns (CAGR)18.70%1-yr return2.05%
Expense ratio1.45%Inception DateMay 3, 2005
Exit Load (after 1-yr)0%#Stocks Held47

From the house of UTI Asset Management Company, UTI Dividend Yield Mutual Fund is the second-largest dividend-paying mutual fund in this list. It started 18 years ago in May 2005.

Mr. Amit Premchandani serves as the fund manager for the fund along with three other mutual funds of UTI AMC. He has been associated with the company since 2009 and holds a CFA charter from CFA Institute and CA charter from ICAI.

It is an open-ended equity scheme. The fund has delivered an annualized return of 18.70% every year in the last three years to its investors. Its expense ratio stands at 1.45%.

This fund holds some 47 stocks in its portfolio with the top ten stocks accounting for 48.87% of the total assets of the fund. Infosys (8.15%), ITC (6.24%), and NTPC (6.01%) are the three largest equity holdings of the UTI Dividend Yield Fund.

Top 5 Dividend Paying Mutual Funds In India #3 – Templeton India Equity Income Direct Plan

Franklin Templeton Investment Logo
Fund CompanyFranklin Templeton Asset Mgmt.Size (AUM in Rs Cr)1,354
3-yr returns (CAGR)27.00%1-yr return9.06%
Expense ratio1.52%Inception DateMay 18, 2006
Exit Load (after 1-yr)0%#Stocks Held40

Templeton India Equity Income Direct Plan is another top dividend-paying mutual fund in our list with a long history of operation. It was set up in May 2006. The fund presently has assets under management of Rs 1,354 crore

It has returned an impressive 27% CAGR gains to its investors over the last three years. In one year, the fund has given a return of 9.06% to the investors. 

The fund is under the stewardship of Anand Radhakrishnan, Rajasa Kakulavarapu & Sandeep Manam. It is suitable for investors looking to build a retirement corpus, education corpus, or ordinary long-term wealth creation. 

It presently has 40 stock holdings with 42.32% assets in the ten largest equity investments. Overall, the fund’s exposure to equity stands at 95.17% of its total assets with Infosys (5.66%), Power Grid Corp (5.60%), and NTPC (4.80%) as the highest three.

Top 5 Dividend Paying Mutual Funds In India #4 – ICICI Prudential Dividend Yield Equity Fund

ICICI Prudential Mutual Fund logo
Fund CompanyICICI Prudential Asset Mgmt. Co.Size (AUM in Rs Cr)1,239
3-yr returns (CAGR)28.21%1-yr return13.64%
Expense ratio0.66%Inception DateMay 16, 2014
Exit Load (after 1-yr)0%#Stocks Held45

ICICI Prudential Dividend Yield Equity Fund is the best-performing fund in our list of the top dividend yield funds. It has given a whopping 28.21% annualized return to its investors over the last three years. The one-year return is also good at 13.64%

The fund commands Rs 1,239 crore as assets under management with 91.97% of that invested in stocks. Infosys (7.04%), ICICI Bank (6.63%), and Sun Pharmaceuticals (6.44%) are the three largest equity investments of the fund among the 45 stocks held.

The expense ratio of the fund is 0.66% for the direct plan.

The fund is managed by Mittul Kalawadia who has 13 years of experience in the industry. He oversees three funds in total, the other two are ICICI Prudential Equity & Debt Fund and ICICI Prudential ESG Fund.

Top 5 Dividend Paying Mutual Funds In India #5 – Aditya Birla Sun Life Dividend Yield Fund

Aditya Birla Captial Logo
Fund CompanyAditya Birla Sun Life AMCSize (AUM in Rs Cr)874
3-yr returns (CAGR)20.871-yr return11.53
Expense ratio1.70%Inception DateFebruary 27, 2003
Exit Load (after 1-yr)0%#Stocks Held56

Managed by Mr. Dhaval Gala & Mr. Dhaval Joshi. Aditya Birla Sun Life Dividend Yield Fund is an open-ended dividend yield fund with assets under management of Rs 874 crore. They both have 15 years of work experience in equity research, capital markets, and investments. 

It is the oldest fund on our list with its inception dating back to February 27, 2003. The fund’s expense ratio is slightly higher at 1.70% for its direct plan with a nil exit load after 1-year redemption. 

It has returned 20.87% CAGR return to its investors over the previous three years with an 11.53% return in the last 12 months. The fund owns a total of 56 stocks in the portfolio accounting for 96.91% of its total assets.

List of Best Dividend Paying Mutual Funds

The table below summarises our findings on the Best dividend paying mutual funds in India

Fund nameSize (AUM in Rs Cr)3-yr return (annualised)1-yr returnExpense ratioTop 3 holdingsAssets in Top 10 Holdings (%)#Stocks HeldStock Allocation (%)Inception Date
HDFC Dividend Yield Fund3,015NA13.180.44%ITC (5.67%), Infosys (5.09%) & HUL (4.96%)40.877299.37December 18, 2020
Tata Dividend Yield Fund479NA6.740.76%TCS (5.48%), Infosys (5.24%) & ICICI Bank (5.18%)40.594997.42May 20, 2021
ICICI Prudential Dividend Yield Equity Fund1,23928.2113.640.66%Infosys (7.04%), ICICI Bank (6.63%) & Sun Pharmaceuticals (6.44%)51.624591.97May 16, 2014
Templeton India Equity Income Direct Plan1,35427.009.061.52%Infosys (5.66%), Power Grid Corp (5.60%) & NTPC (4.80%)42.324095.17May 18, 2006
Aditya Birla Sun Life Dividend Yield Fund87420.8711.531.70%Infosys (6.64%), ITC (5.85%) & NTPC (3.61%)38.175696.91February 27, 2003
Sundaram Dividend Yield Fund37418.909.001.02%Infosys (5.82%), HDFC Bank (5.31%) & NTPC (4.58%)39.75292.26January, 2013
UTI Dividend Yield Fund2,82118.702.051.45%Infosys (8.15%), ITC (6.24%) & NTPC (6.01%)48.874797.91May 3, 2005

In Conclusion

We looked at the Top 5 Dividend Paying Mutual Funds In India above. They are of different sizes and vary across their three-year performances. However, investors must remember that past performance doesn’t guarantee future returns. Furthermore, they should carefully scrutinize the scheme documents before making an investment decision.

In your opinion, are these dividend-paying mutual funds a better alternative to IDCW plans? How about you let us know in the comments below?

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