A fund with frequent dividends

Then maybe you should consider Birla Dividend Yield Plus.

A mutual fund generally offers two schemes: dividend and growth.

The dividend option does not re-invest the profits made by the fund through its investments. Instead, it is given to the investor from time to time.

In the growth scheme, all profits made by the fund are ploughed back into the scheme. This causes the Net Asset Value to rise over time. The NAV is the price of a unit of a mutual fund.

That is why the NAV of the growth option will always be higher than that of the dividend option because money is going back into the scheme and not given to investors. 

In a mutual fund, it does not matter how many dividends get declared as it is just a part of your returns given to you. It is not something extra that you get, like in shares.

If you are looking at a long-term investment and are not interested in money being given to you at various intervals, the growth option is meant for you.

If you are keen on receiving an income at various intervals, opt for the dividend option.

But do note, the dividend is not guaranteed.

If a fund declared dividends twice last year, it does not mean it will do so again this year. You could get a dividend just once or you might not even get it this year.

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The objective of the fund manager is to invest in the shares of companies that offer high and regular dividend. And, the fund does not hesitate to distribute dividends to its investors.

Since its launch in February 2003, the fund has declared 11 dividends. An excellent dividend track record for just two-and-a-half years. 

Incidentally, this is the highest number of dividends declared by any diversified equity fund during the same period.

Although the amount of dividend declared has not been too high, the frequency certainly is.

After Birla Dividend Yield Plus, Tata Equity Opportunities Fund follows with a track record of 9 dividends in the same period.

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