When we think of investing in stocks, we usually think of “Buy Low, Sell High.” We chase companies like Tesla or Zomato, hoping their prices will skyrocket.
But there is another, quieter way to make money in the stock market—a strategy used by some of the world’s most successful investors, including Warren Buffett.
It is called Dividend Investing.
Imagine owning a house. You get money if the house price goes up (Capital Appreciation), but you also get monthly rent (Dividend).
Dividend Yield Mutual Funds work on the same principle. They invest in companies that share their profits with shareholders regularly. This gives you two engines of wealth creation: Stock Price Growth + Regular Cash Payouts.
In this guide, we will explore what Dividend Yield Funds are, why they are considered a safer bet in volatile markets, and how you can invest in them using the Sanchay Karo App.
What is a Dividend Yield Mutual Fund?
A Dividend Yield Fund is an equity mutual fund that invests predominantly (at least 65% of its assets) in dividend-yielding stocks.
What are Dividend-Yielding Stocks?
These are usually shares of mature, stable, and cash-rich companies. Instead of reinvesting all their profits back into the business (like high-growth startups do), these companies distribute a large portion of their profits to shareholders as Dividends.
Examples often include:
- PSUs (Public Sector Undertakings): Power Grid, NTPC, Coal India, ONGC.
- FMCG Giants: ITC, Hindustan Unilever.
- IT Majors: TCS, Infosys, HCL Tech.
When a mutual fund buys these stocks, it earns these dividends. The fund manager can then either distribute this income to you (under the IDCW option) or reinvest it to increase the fund’s NAV (Growth option).
Why Should You Invest in Dividend Yield Funds?
If you want the returns of the stock market but get anxious when the market falls, Dividend Yield Funds are your safety net.
1. The “Safety Cushion”
High dividend-paying companies are usually large, profitable, and stable. In a market crash, these stocks tend to fall less than high-growth stocks. The dividend acts as a floor, supporting the stock price.
2. Dual Source of Returns
Unlike a growth fund where you rely solely on the stock price going up, here you win in two ways:
- Capital Appreciation: The stock price rises over time.
- Dividend Income: Regular payouts add to the overall return.
3. Low Volatility
These funds are generally less volatile than Mid-Cap or Small-Cap funds. They are the “Tortoise” of the equity race—slow, steady, and reliable.
Who Should Invest in Dividend Yield Funds?
These funds are not for thrill-seekers looking to double their money in a year. They are for:
- Conservative Equity Investors: If you want better returns than FDs but are scared of pure equity risks, this is a great entry point.
- Retirees: A great alternative to Monthly Income Plans (MIPs). While returns aren’t guaranteed, the underlying companies are usually stable cash generators.
- Portfolio Stabilizers: If your portfolio is heavy on risky Small-Cap stocks, adding a Dividend Yield Fund provides balance and stability.
How to Invest with Sanchay Karo App (Step-by-Step)
Finding the right Dividend Yield fund can be tricky. Some funds chase “high yield” traps (companies that pay dividends just before going bust). Sanchay Karo’s AI filters out these bad apples and helps you find quality funds.
Step 1: Download the App
Start your journey towards stable wealth creation.
- 📲 Android Users: Click to Download from Play Store
- 📲 Apple Users: Click to Download from App Store
Step 2: Complete Paperless KYC
Sign up with your mobile number and complete your video KYC in under 2 minutes using your PAN and Aadhaar. It is 100% secure.
Step 3: Search for “Dividend Yield” Funds
- Open the app dashboard.
- Go to “Invest” -> “Equity” -> “Dividend Yield”.
- You will see top-performing funds like Templeton India Equity Income Fund, ICICI Prudential Dividend Yield Equity Fund, HDFC Dividend Yield Fund, etc.
Step 4: Analyze with “Smart Suggest”
Don’t just look at past returns. Use our AI to check:
- Portfolio Quality: Does the fund hold solid companies like TCS and Power Grid?
- Dividend History: Has the fund consistently declared dividends (if you choose the Payout option)?
Step 5: Choose Option: Growth vs. IDCW
- Growth Option: The dividends received by the fund are reinvested. Your NAV goes up. (Recommended for Wealth Creation).
- IDCW (Payout) Option: The fund pays out the dividends to your bank account. (Recommended for Regular Income).
Step 6: Invest via SIP or Lump Sum
- SIP: Start small with ₹500/month to build discipline.
- Lump Sum: Dividend yield funds are decent for lump sum investments as they are less volatile.
Pay securely via UPI or Net Banking.
Why Sanchay Karo?
- Unbiased AI: We don’t push funds just because they are popular. We analyze the underlying stock quality.
- Goal Mapping: Tag this investment to a “Safe” goal like “Emergency Corpus” or “Parents’ Healthcare”.
- Transparent Tracking: See exactly how much dividend your fund is earning internally.
Conclusion: The “Sleep Well” Investment
In a world obsessed with speed and high risks, Dividend Yield Funds offer the comfort of predictability. They allow you to participate in the India Growth Story without the roller-coaster ride of high-beta stocks.
If you prefer consistent compounders over overnight sensations, this is the fund for you.
Start your stable investment journey today.
👇 Download Sanchay Karo Now:
📲 Android: Get it on Google Play 📲 iOS: Get it on App Store
Smart Investment. Simple Process. Secure Platform. 🔒📈
Disclaimer: Mutual Fund investments are subject to market risks. Please read all scheme-related documents carefully. Past performance is not an indicator of future returns.
