Dividend ELSS Mutual Funds and The Top Ten Performers for The Last One Year
A lot of people must have told you that it’s a great idea to make the investment in a dividend mutual fund. But the question that arises here is - are these funds suitable for you and your financial goals? To get the answer to this question, you must understand these funds properly before deciding on whether or not to invest in them. Learning the characteristics of these mutual funds that pay dividends will infuse confidence in you to make better investment decisions, at least when they are linked to this mutual fund variety.
Dividend mutual funds are, in essence, stock funds, which make investments in companies that pay dividends (profits shared by companies with their shareholders). You can either use the dividend as a source of income or you can use it to purchase more shares of the mutual fund. A lot of investors invest in dividend funds for the former benefit i.e. earning income. As dividends serve the purpose of a steady reliable income from the mutual fund investment, investors love it.
Since dividend funds generate a steady reliable income, it is well suited to the retired lot of employees. In addition, these funds are far less risky or aggressive than other kinds of funds, primary belonging to the growth category.
Economic ecosystems where bond mutual funds are not that attractive, dividend mutual funds play a pretty impressive role. For instance, bonds often offer bad yields when interest rates have plummeted, despite good economic conditions. But this is not a problem with dividend mutual funds.
Now, let’s come to what is an Equity Linked Savings Scheme. An Equity Linked Savings Scheme, abbreviated as ELSS is a mutual fund which is open ended by nature. The main characteristic of this mutual fund is that it helps you save taxes. Besides, it offers you the opportunity to grow wealth. Tax benefits offered by ELSS funds are under Section 80 C of Income Tax Act, 1961.
Talking about the best ELSS mutual funds in the market under the dividend category, here is a comprehensive list of products that have performed way better than other comparable schemes in the market for the last one year.
Source: Swaraj Wealth Research
The first in the list is BOI AXA Tax Advantage Fund – Regular plan - Dividend which offered a distribution yield of 35.89% during the period 05-01-2017 to 05-01- 2018. This scheme, launched on the 25th of February, 2009 is the top performing fund in the last one year.
The second-best performer is the BOI AXA Tax Advantage Fund - ECO Plan - Dividend, launch on the 25th of February, 2009. It offered a distribution yield of 21.21% in the above-mentioned time frame.
By offering a distribution yield of 19.47%, ICICI Prudential Long Term Equity Fund (Tax Saving) - Dividend, which came into existence on 19-08-1999, has clinched the third position.
The fourth top performing scheme is Sundaram Diversified Equity - A Long-term Tax Saver Fund - Dividend, launched on the 22nd of November, 1999. It gave a trailing 1 year annual dividend yield of 13.44%.
In the fifth position, we have the Kotak Tax Saver- Scheme-Dividend, launched on 23-11-2005 which offered a trailing 1 year annual dividend yield of 13.12%.
Tata India Tax Savings Fund-Dividend-Regular Plan came into existence in the year 1996. Its dividend distribution in the past one year has been 11.07%, which helps it take the sixth slot in the list.
DHFL Pramerica Long Term Equity Fund- Regular Plan- Regular Plan - Dividend Option, launched in the year 2015, has secured the seventh position in the list with a distribution yield of 10.64%.
The eighth rank has been bagged by Aditya Birla Sun Life Tax Relief 96 - Dividend Option, launched on 29th of March, 1996. It offered a trailing 1 year annual dividend yield of 10.43%.
The ninth rank holder is the scheme named IDFC Tax Advantage (ELSS) Fund - Regular Plan - Dividend, launched on the 26th of December, 2008. It offered a distribution yield of 9.60% in the last one year.
The last in the list is Reliance Tax Saver (ELSS) Fund - Dividend Plan - Dividend Payout Option. This scheme, which had its advent on the 21st of September, 2005 gave a distribution yield of 9.39% in the last one year.
If you are dividend mutual fund fan, then choosing any of these schemes would be ideal. However, to understand it suitability to your financial goals you must talk to your advisor.