Stock dividents from mutual fund's portfolio


Hello fellow traders

What do equity mutual funds with growth options do with the dividends received on individual stocks? since they don’t pay any dividends, do they have to have to re-invest it into the fund? in that case, do you get extra units or NAV goes up?

Can the mutual fund company keep those stock dividends as their profit?


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Dividend funds keep on distributing profits by way of dividends and thus their NAV drops after payment of dividend. While Growth funds don’t do the same and hence their NAV keeps on increasing (depending upon market conditions).


The question is not about the dividends paid out by the fund in the dividend scheme. The question is about the stock dividends that the mutual find company receives from the stocks they invest in.


The dividend option doesn’t really mean that the fund is passing on the dividends from underlying stocks to investors. In fact, the dividend plan has nothing to do with dividend investing strategies or focusing on earning dividend income. MF Dividend Plans are essentially systematic withdrawal plans, so with Growth plans that amount stays invested and continues to compound…

I recently wrote an article on Everything you need to know about MF Dividends& Dividend Plans . It has relevant & recent info from May 2019. Hope this helps, and shout out if you have feedback or more questions :slight_smile: