HDFC Dividend Yield mutual fund NFO details

HDFC Dividend Yield Mutual Fund is a NFO from the house of HDFC Mutual Fund.

It would be an open equity scheme predominantly investing in dividend yielding stocks.

HDFC Dividend Yield mutual Fund as the name suggests would be a fund investing in stocks with a high dividend yield ratio.

The fund would be open for subscription from November 27, 2020 to December 11, 2020.


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NFO details for HDFC Dividend Yield Mutual Fund

Scheme Opens


Scheme Closes


Fund Manager

Mr. Gopal Agarwal


NIFTY Dividend Opportunities 50 TRI

Minimum Investment (Lumpsum)


Fund Category

Dividend Yield

Exit Load

1% if redeemed within a year



HDFC Dividend Yield Mutual Fund Investment Objectives

The investment objective of this dividend yield fund is to attain long term growth while investing predominantly in equity and equity related instruments of dividend yielding companies.

There is no guarantee that the investment objective of the fund would be realized.


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HDFC Dividend Yield  mutual fund Allocation

The asset allocation for this dividend yield fund would be something like this

Asset Class

Minimum %

Maximum %

Equity and Equity related instruments of Dividend Yielding companies



Equity and Equity related instruments of companies other than above



Units issues by REITS and InvITs



Non – convertible preference shares



Debt securities and money market instruments and fixed income derivatives



Units of Mutual funds




The above figures are only indicative and not fixed, the fund manager has the liberty to move across the asset classes depending upon prevailing market conditions as long as they remain within the mandate permitted.

The fund can also invest in REITs and InvITs if so desired.


Additional reading: Click Here to read more about what are Dividend yield mutual funds


HDFC Dividend Yield mutual fund Suitability

This fund is suitable for investors:

  1. Looking for a diversified portfolio of dividend yielding stocks.
  2. Who have an investment horizon of 3 years or more.
  3. Who are looking for a more stable and less volatile experience as compared to other equity mutual funds.

HDFC Dividend Yield mutual fund Investment strategy

The fund aims to invest minimum 65% of its assets in dividend yielding companies or companies that choose to do a buyback in addition of payment of dividend or in lieu of dividend.

Preference would be given to stocks having a consistent record of paying dividends at the time of investment or paying higher dividend yield than NIFTY 50 Index.

The fund will be sector and market cap agnostic.

This equity fund would look for

  1. Companies that have low capital-intensive businesses with stable cash flows.
  2. Companies with growing profits and ability to increase dividends.
  3. Companies with surplus cash and opportunities across sectors.




What is a Dividend Yield mutual fund?

A dividend yield mutual fund is a mutual fund scheme that invests in companies that have historically declared dividends perpetually for a long time.

Therefore, by default it means these mutual fund schemes invest in companies with strong balance sheets, highly efficient management and a robust functioning in place.

This is because a company can only declare high dividends only if it makes good profits and it can only make good profits when it satisfies all the qualifications mentioned above.

It is not enough that these companies pay high dividends consistently to qualify for a dividend yield mutual fund, they also need to have a high dividend yield.

The fact that the fund has to invest in a particular set of stocks, makes the job of the fund manager easier considering his choices are limited anyway.

A dividend yield fund is not one that pays dividends regularly, it is one that invests in companies that pays dividends regularly.

The name of the fund denotes the approach of the fund rather than a willingness or potential to pay dividends.


Additional reading: Click Here to read why you should NOT invest in Dividend mutual funds.

What does Dividend Yield mean?

Dividend Yield is the dividend paid per unit divided by the market price.

It is the ratio of past paid dividends to the market price per share.

This includes both partial and full dividends.

Companies that pay dividends usually do so annually and then there are some who may even do so more than once in a year.

A dividend yield ratio most importantly takes into account the price of stock of the company.

If the stock price of a company is low for whatever reasons but it has a good history of pay dividends regularly then it would be preferred over a company with a high price and having a good track record of paying dividends.

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Advantages of Dividend Yield mutual funds 

A dividend yield mutual fund would by default only be investing in quality stocks.

This is because only quality companies would be in a position to declare dividends on a regular basis.

This therefore means that the portfolio is only built with quality stocks.

Since the portfolio is made up of quality companies, it helps the fund to counter volatility which is a given with equity investing.

These funds provide a better risk reward for a medium to long term horizon outlook.


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Disadvantages of Dividend Yield mutual funds

The portfolio of such funds is restricted in terms of their choices.

They can only invest in stocks of companies that have a high dividend yield ratio.

Therefore, their hands are tied when it comes to portfolio diversification.

These funds are not restricted with regards to caps be it large cap, mid cap or small cap.

There is a possibility then that these funds could allocate a higher proportion to mid and small cap companies.

Mid and small companies tend to fall the most in a volatile market.

The fund manager would be going with stocks of companies with a high dividend yield, irrespective of the cap.

Mid and small cap mutual funds need to be well diversified so as to face volatile times efficiently but that cannot be the case here since the fund manager’s choices are limited.

He/she can only pick mid and small cap companies with a high dividend yield ratio.


      You should only invest in a dividend yield mutual fund if it adds something new to your existing portfolio, is not part of your core portfolio and you have a very good understanding as to the strategy applied by your dividend yield scheme because every dividend yield mutual fund functions in a manner that is distinct from the rest.


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Disclaimer : While due precaution has been undertaken in the preparation of this article, The Mutual Fund Guide or any of its authors will not be held liable for any investments based on the above article. The above article should not be considered financial advice and has been published only for your perusal. Due credit has been given in case wherever required, in case you feel any part violates any rights then do get in touch with us and we shall get it duly removed.  
Mutual Fund investments are subject to market risks. Please read the offer document carefully before investing

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