Mutual Funds: 3 dividend yield funds delivered more than 20% annualised returns in the past 5 years

Prior to investing in a mutual fund scheme, investors often weigh the pros and cons of several factors including the category of fund, macroeconomic factors, market capitalisation of stocks the fund invests into and importantly – historical performance of different schemes in the category.

Although past performance is no guarantee of the future returns, investors still give a considerable importance to the size of returns delivered by one scheme vis-à-vis others.

Here we list out the dividend yield mutual funds which have delivered over 20 percent returns in the past five years.

For the uninitiated, let us first describe what these funds are.

Dividend yield mutual funds

These mutual funds refer to the schemes which predominantly invest in dividend-yielding stocks, with at least 65 percent in stocks. Dividend yielding stocks are the shares of companies, which regularly pay dividends to their investors.

It is a small category of mutual funds with only nine schemes under it, and total assets under management (AUMs) amounting to ₹21,931 crore.

There are three dividend yield mutual funds, which have given a CAGR return of over 20 percent in the past five years. These are Templeton India Equity Income Fund, ICICI Prudential Dividend Yield Equity Fund and Aditya Birla Sun Life Dividend Yield Fund.

(Source: AMFI; returns as on Feb 1, 2024)

As we can see in the table above, if someone had invested ₹one lakh in Templeton India’s fund, it would have grown to ₹2.71 lakh. The same investment would have grown to ₹2.62 lakh in five years. At the same time, if someone had invested ₹one lakh in ICICI Prudential’s dividend yield fund, it would have swelled to ₹2.67 lakh in five years.

Templeton India Equity Income Fund: It was launched on May 18, 2006 and has given an annualised return of 15 percent since inception. The top portfolio constituents include NTPC, Power Grid, Coal India, Infosys, HDFC, NHPC and GAIL India.

Aditya Birla Sun Life Dividend Yield Fund: The scheme was launched on Feb 26, 2003 and has given an annualised return of 19.28 percent since inception. The top constituent stocks are Infosys, ITC, Coal India, NTPC, NLC, NMDC, CMS Info Systems and Kewal Kiran Clothing.

ICICI Prudential Dividend Yield Equity Fund: It was launched on May 16, 2014 and has given an annualised return of 15.76 percent since its inception. The key constituent stocks are NTPC, ICICI Bank, Sun Pharma, Maruti Suzuki, HDFC Bank and Bharti Airtel.