Or only reinvestment units.
Depending on the type of investments included in the portfolio, mutual funds may pay dividends, interest, or both.
Types of Mutual Funds
1) Stock funds
2) Bond funds
3) Balanced funds
4) Money market funds
There are four main categories of mutual funds, and each category suits different investing goals. Stock funds include only investments in the stock market. If any of these stocks pay dividends, then the mutual fund also pays dividends.
Similarly, bond funds include only investments in corporate and government bonds. Most bonds pay guaranteed amounts of interest each year, called coupon payments. Because bonds pay interest, bond funds do as well.
Balanced funds invest in stocks and bonds. Balanced funds, therefore, are almost guaranteed to pay interest, and they may also pay dividends depending on the specific stocks included in the portfolio.
Money market funds are the most stable type of mutual fund and include only investments in very short-term debt instruments such as municipal bonds. Money market funds also pay interest, though the rate of return is generally lower than other fund types.
Yes, they do. If you are investing in a Dividend Re-invest Scheme then you would be getting some extra units depending upon the calculation carried out by the AMC which in turn depends upon the kind of fund they have created and the allocation of capital for the same. But, if you are investing in a Dividend Payout Scheme then you would be receiving the dividends in the form of cash.