Updated on 6 Oct 2016
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Top 5 Dividend yield funds for best returns in volatile times
Dividend yield funds that invest in shares of high dividend yield companies have done as well or even better than many diversified equity schemes which seek to invest in growth stocks.
All five dividend yield plans have managed to secure a place among the 40 top performing equity schemes over a five-year time frame until Monday (3 Oct 2016)
While such stocks offer cash payments periodically in the form of dividends, they also are less volatile compared with growth stocks. Hence, these stocks provide a cushion when the market is going through a volatile phase.
Over two-year, three-year and five-year periods all the dividend yield funds have managed to deliver double-digit returns.
The best performing fund was BNP Paribas Dividend Yield Fund with 23.4 percent on a three-year window.
Dividend yield is the ratio of company's dividend to market price of the company. High dividend yield hints that the stock is currently under-priced. High dividend yield shares are less volatile than high growth stocks.
This cuts both ways. In a falling market, these stocks may not slide too much, but the gains in a rising market are likely to be respectable than spectacular.
According to fund managers, generally, companies in banking, oil and gas, metals, and select mid-cap capital goods offer scope for high dividend yield companies.
Following are top 5 dividend yield funds that investors can choose from