Dividend Payout

In case of Dividend Payout option, you receive any dividend declared by the companies included in the portfolio of your scheme. Within dividend option, you can either choose to receive the dividend payouts or reinvest the declared dividend back into the scheme. Dividend Payout options lets you receive any profit/surplus declared by the scheme during the time you remain invested in the scheme. Dividend payout option provides a regular cashflow, though there is no guarantee that the scheme will continue to pay you dividend always at regular intervals.

A Mutual Fund scheme invests in a basket of securities like stocks, bonds, gold and even international securities. Some of these securities pay dividends while others may pay interest while some others may pay bonus. The profits/surplus made by the scheme in the form of dividends, interests, gains or bonus can be distributed among the scheme’s investors at the discretion of the fund managers. Fund managers decide when to distribute profits from the scheme among investors. In case of dividend payout option, you will receive the profits made by the scheme whenever the fund manager decides to distribute this profit among investors. The NAV of a dividend scheme falls to the extent of dividend declared on the ex-dividend date i.e. the next business day after the dividend has been declared.

The dividends may stop coming if the scheme makes a loss at any time, or if the fund manager decides to reinvest the profit back into the scheme by buying more assets.