Dividend yield funds generally do not get the kind of attention many other equity scheme categories garner. Though they do not deliver spectacular returns, these schemes tend to protect downsides during market falls quite well. Investments are generally made in stocks of companies that give reasonably high levels of dividends. Stocks from the technology, energy, FMCG and financial services spaces tend to figure in prominence in these portfolios, as do healthcare picks. In the last one year, dividend yield funds have delivered better returns than many other popular diversified equity scheme categories. One key aspect to note in these funds is that the portfolio valuation as measured by the price-earnings multiple is quite low compared to most other diversified equity schemes and usually hovers around the mid to late teens. Here are the top five funds from the category that delivered 39-51 percent returns in the last one year.
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ICICI Prudential Dividend Yield Equity Fund is the topper in the category with 51.4 percent returns over the past one year. More than 77 percent of the portfolio is invested in large-cap stocks. Technology, energy and financial services sectors are the key holdings of the scheme. The fund also holds cash positions in excess of 5 percent. It manages assets of Rs 543 crore and charges an expense ratio of 1.53 percent for its direct plan.
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Templeton India Equity Income Fund delivered 46.3 percent returns over the past one year. The scheme has been around for more than 15 years. In addition to domestic stocks, the fund invests in real estate investment trusts and overseas shares as well. Cash levels are at times more than 6 percent of the portfolio. It manages assets of Rs 1,198 crore and charges 1.65 percent for the direct plan.
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HDFC Dividend Yields Fund rolled out just over a year ago. It has delivered 41.8 percent returns in the last one year. As with other schemes in the category technology, energy, FMCG and financial sectors are key holdings. It manages Rs 2,757 crore in assets and levies an expense ratio of 0.23 percent for its direct plan.
UTI Dividend Yield Fund has been in existence for over 16 years now. It has delivered 39.4 percent returns in the last one year. The sector exposure is similar to most other funds in the category. But UTI Dividend Yield takes more concentrated exposure with respect to individual stocks and generally remains fully invested. It has assets worth Rs 3,021 crore and charges 1.46 percent for its direct plan.
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Aditya Birla Sun Life Dividend Yield Fund gave 38.8 percent returns over the last one year. The fund has a track record of more than 18 years. It manages assets of Rs 832 crore and levies 1.82 percent on its direct plan.
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These funds are not our recommendations. Given the diversity in terms of categories and funds available, the dividend yield schemes may not be the priority for most investors. Though most portfolio holdings may provide valuation comfort, rarely do these schemes deliver spectacular returns. You can use our MC30 list to pick funds and build a healthy portfolio.
