Monthly dividend-paying mutual funds are a popular investment option among investors who are looking for regular income. These funds distribute a portion of their earnings to investors every month, providing a steady stream of income.
In 2020, several mutual funds in India offered monthly dividends to investors. Here are some of the best monthly dividend-paying mutual funds in India in 2020:
- HDFC Monthly Income Plan – This fund aims to provide regular income by investing in a mix of debt and equity instruments. It has a dividend yield of around 8% and a track record of consistent performance.
- Aditya Birla Sun Life Monthly Income – This fund invests primarily in debt securities and has a dividend yield of around 7%. It has a long-term track record of consistent performance.
- ICICI Prudential Monthly Income Plan – This fund aims to provide regular income by investing in a mix of debt and equity instruments. It has a dividend yield of around 7% and a track record of consistent performance.
- Reliance Monthly Income Plan – This fund invests in a mix of debt and equity instruments and has a dividend yield of around 7%. It has a long-term track record of consistent performance.
- SBI Magnum Monthly Income Plan – This fund invests primarily in debt securities and has a dividend yield of around 6%. It has a long-term track record of consistent performance.
It is important to note that the performance of mutual funds can vary depending on market conditions and other factors. Investors should conduct thorough research before investing in any mutual fund and consult with a financial advisor to determine the best investment strategy for their individual needs and goals.
Monthly dividend-paying mutual funds are ideal for those investors who are looking for a steady source of income on a regular basis. These funds invest primarily in debt securities and provide a dividend payout every month, which can help investors to meet their regular expenses.
It is important to note that the dividend payout is not guaranteed and can vary depending on the performance of the fund. The dividend payout also depends on the prevailing interest rates in the market. If the interest rates fall, the dividend payout may also decrease.
In India, monthly dividend-paying mutual funds are usually categorized under debt-oriented hybrid funds. These funds invest in a mix of debt and equity securities, with a higher allocation towards debt securities.
Investors who are looking to invest in monthly dividend-paying mutual funds should consider the following factors:
- Fund performance – Investors should consider the long-term track record of the fund and its performance during various market conditions.
- Expense ratio – Investors should also consider the expense ratio of the fund, which is the amount charged by the fund house to manage the fund. Lower expense ratios can help investors to maximize their returns.
- Asset allocation – Investors should also consider the asset allocation of the fund and the level of risk involved. Debt-oriented hybrid funds usually have a lower risk profile compared to equity-oriented hybrid funds.
- Investment horizon – Investors should also consider their investment horizon before investing in monthly dividend-paying mutual funds. These funds are ideal for investors with a medium to long-term investment horizon.
Conclusion
monthly dividend-paying mutual funds can be a good investment option for investors who are looking for a steady source of income on a regular basis. However, investors should conduct thorough research before investing in any mutual fund and consult with a financial advisor to determine the best investment strategy for their individual needs and goals.
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Frequently Asked Questions (FAQs)
Q: What are monthly dividend-paying mutual funds in India? A: Monthly dividend-paying mutual funds in India are mutual funds that invest primarily in debt securities and distribute a portion of their earnings to investors every month, providing a steady stream of income.
Q: What is the dividend yield of monthly dividend-paying mutual funds in India? A: The dividend yield of monthly dividend-paying mutual funds in India can vary depending on the performance of the fund and prevailing interest rates in the market. Typically, monthly dividend-paying mutual funds in India offer a dividend yield in the range of 6-8%.
Q: What are the benefits of investing in monthly dividend-paying mutual funds in India? A: Monthly dividend-paying mutual funds in India can provide a steady source of income on a regular basis, which can help investors to meet their regular expenses. These funds are also less risky compared to equity-oriented mutual funds, making them an ideal investment option for conservative investors.
Q: What are the risks associated with monthly dividend-paying mutual funds in India? A: The main risk associated with monthly dividend-paying mutual funds in India is the credit risk of the underlying debt securities. If the issuer of the debt security defaults, the value of the fund can decline, which can affect the dividend payout.
Q: What should investors consider before investing in monthly dividend-paying mutual funds in India? A: Before investing in monthly dividend-paying mutual funds in India, investors should consider the long-term track record of the fund, the expense ratio, the asset allocation, and their investment horizon. They should also consult with a financial advisor to determine the best investment strategy for their individual needs and goals.
Q: Are monthly dividend-paying mutual funds in India tax-efficient? A: Monthly dividend-paying mutual funds in India are subject to dividend distribution tax (DDT), which is deducted at the source before the dividend payout is made to investors. However, investors can claim a tax credit for the DDT paid while filing their income tax returns.
