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Some Good Dividend-paying MFs

| 10/11/2010 3:50 PM Monday

Q. I am a 31-year-old self-employed person. My annual income is Rs 2-3 lakh. My current SIPs are as follows:

1. ICICI Dynamic Plan (Growth): Rs 1,000 p.m. for 5 years for yearly top-up of Rs 500
2. Reliance RSF Balanced (Growth): Rs 1,000 for 3 years Now I want to invest Rs 2,000 p.m. more for 10 years in dividend payout option so that in future I can get regular income. 

My choice is as follows:

a. Sundaram BNP Paribas SMILE Fund
b. IDFC Small and Midcap Fund
c. Sundaram Growth Fund
d. HDFC Equity Fund

Please guide me for my investment and suggest fund or equity having consistent dividend-paying history.
- Saurabh Raghuvansi, Mumbai

A. Saurabh, out of your list, my preference is for HDFC Equity Fund as a diversified option. IDFC Small and Midcap is yet to establish a track record, though I do have faith in the fund manager going by his performance in other funds. Earlier track records on dividend payouts may not hold good as dividend rules have been changed by SEBI. Earlier schemes could pay dividends out of their unit reserve whereas now SEBI has insisted that dividends be paid out from profits booked, only. Nevertheless, annual dividends are quite likely from most funds. A fund not in your list, but worth considering for its dividend intentions is Templeton India Equity Income Fund, a value fund with a small exposure to value stocks in other countries, too.


 

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