Mutual Funds Day 23: Dividend Yield Fund
People who invest in assets look for two possible types of returns
- Capital Appreciation
- Dividends
Capital Appreciation is when the valuation of the Asset grows and fetches you a higher resale value. Only Assets will have value appreciation, Liabilities do not. Time is a friend of assets and an enemy of liabilities.
Dividends are incomes paid out to the shareholders and can be considered similar to the rentals you get from a tenant. Few companies in India prefer to pay out a fraction of their profits as dividends to their shareholders, these firms are called high dividend-yield companies.
When a mutual fund invests in high-dividend stocks it is called Dividend Yield Fund. The rule states that a minimum of 65% of all assets should be held in this category.
Examples:
https://viswaram.com/mutual-funds-day-24-focused-funds-7fa9c02e6f9a
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