When do these mutual funds companies pay the dividend? As I invested through Zerodha coin in the month of May in a dividend payout mutual funds. But I haven’t received any dividend till now. Do they pay it yearly or how?
Hi @Baidurya_Sarkar Whats your view on this i.e. mutual funds company paying dividend.
If you think that it is exactly the same as investors receives dividend in case of Equity then your understanding is incorrect.
Companies pay dividend out of the profits earned by them.
Mutual Funds pays the investors money back to them and this act is called as “Dividend” by them.
For Eg - If you hold 1000 units and the latest NAV is Rs. 150 then the market value of your investment is Rs. 1,50,000 . Now if mutual fund companies declares that they will be declaring dividend of Rs. 2 then following things will happen -
1 - You will receive dividend of Rs. 2,000 (1000 units * 2 dividend rate)
2 - Your investment value will drop to Rs. 1,48,000 (1000 units * 148 revised NAV post dividend declaration)
Total value still remains Rs. 1,50,000 only
Its like mutual fund company giving back your money to you.
P.S. I have considered Equity mutual fund for the above calculation. If dividend is declared in DEBT mutual fund then investor will receive much less then Rs. 2000 as dividend. (Part of it is paid to Central Government by mutual fund companies in the form of DDT (Dividend Distribution Tax)) . Equity mutual fund is exempt from charging DDT. 
Happy Investing
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Thanks for the knowledge, but I think dividend is tax free. So in that case also, I am at a little profit even if they pay it from my earnings. Rectify me if I am wrong, because I don’t know much about this.
But if you can kindly throw some lights on the issue that I have raised regarding dividend dates, I will be obliged. Thanks anyway for your time.
Dividend is declared as per the plan frequency in which you have invested.
Eg. If you have invested in XYZ Liquid Scheme - Daily Dividend option - Then the MF declares dividend on the daily basis. Same goes for Weekly, Monthly, Quarterly and Annually.
If you have invested in XYZ Liquid Scheme - Weekly Dividend option - Then the MF declares dividend on the weekly basis.
If you have invested in XYZ Liquid Scheme - Monthly Dividend option - Then the MF declares dividend on the monthly basis. So on and so forth…
AMC issues notices on the newspaper / also post on the MF website in case dividend is declared in Equity schemes with all the requisite details including dividend rates.
Please check this Link
Is Equity MF exempted from DDT post 2018 budget as well?
Isn’t Dividend Option better?
When AMC doesn’t find any good opportunity, they are not forced to invest in poor stocks. They can declare a dividend and return the money back. Like the situation that happened post-2018 election.
Or can AMCs keep some money as liquid instead of investing all the money?
No @ashitvora . From April 01, 2018 equity mutual funds are no more exempt from DDT. Effective rate of DDT for equity mutual funds is 12.9422% (This is the effective rate). Actual DDT rate is 10%.
Eg - If MF declares dividend of Rs. 5, than in that case you shall only receive Rs. 4.427043 as dividend, balance Rs. 0.572957 will be paid as DDT to government by the MF.