What is meant by a dividend yield (mutual) fund?

There are some mutual funds specially denoted as “Dividend yield funds”. Can anybody please explain how these are different from diversified equity funds? It seems dividend yield funds can be of large or mid and small cap in nature. What type of investors should be interested in investing in these and with what aim? Are these good for long term growth?

3 Replies to “What is meant by a dividend yield (mutual) fund?”

  1. Div yield funds are those who invest in High div paying companies, which may assure good short term growth. But mind u, basically we should understand what is dividend first.
    It is not necessary that any company if it is not giving any div. is a bad company. and vice versa.
    On the contrary, the companies who are paying heavy div, are giving back the profits generated to the shareholders, that does not necessarily mean that it is surplus. It may so that the company does not have any foresight in the industry for expansion or related diversifications which may require capitol. Such companies after certain period may loose the race.
    Therefore simply put, one should understand, if the company can creat surplus, then if u keep the surplus with them for better expansion, you may earn more in the coming years rather than to reap all the benefits in a moment.

  2. Your mixing apples and oranges.
    Most mutual funds pay a dividend at the end of the year.
    Some mutual funds pay a dividend every month.
    You can do one or two things with the dividend yield.
    Reinvest it or have it sent to you in cash (check).

    Most mutual funds are diversified be they large cap
    or small cap.

    If you are in it for the long haul, it would make no difference
    if it’s dividend paying or not, Just hope for the best.

    You also have to think about your risk tolerance, your age
    and purpose of the investment.

  3. This fund invest a high dividend paying stock for getting high return. The stock who paying high dividend is a good fundamental so risk is very low

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