5 Dividend Yield Mutual Funds that Could Surprise Investors – Money Insights News

One imagines a monthly payout landing in their account. The other is hunting for companies that generate so much cash they can afford to be generous.

The first camp is chasing IDCW plans, where the fund hands you a payout that’s quietly skimmed off your own NAV and taxed at your slab.

The second is after the real thing: the Dividend Yield Fund, a SEBI-defined equity category where a manager deliberately stacks the portfolio with high-yield, cash-rich businesses and lets that yield compound inside the fund.

Here, we’re going to discuss the second-type of funds – specifically the five dividend yield funds in their category sitting on the largest piles of investor money in the country.

While they may look boring at the first glance, the differences between them matter far more than the AUM figures that rank them.

#1 SBI Dividend Yield Fund

First on the list is SBI Dividend Yield Fund.

It’s an open-ended equity scheme that invests predominantly in dividend-yielding companies, benchmarked against the NIFTY 500 – TRI.

As of May 2026, the fund manages assets worth Rs 83.1 billion (bn), making it the largest dividend yield fund in India by AUM despite being one of the youngest, having launched only in March 2023.

If we look at the key risk metrics, the fund’s beta of 0.79 indicates that it has historically moved less than the broader market.

Its standard deviation of 0.72 reflects the portfolio’s volatility, while the Sharpe Ratio of 0.00 points to muted risk-adjusted returns over the measured period.

How Does the Fund Invest?

The fund runs a diversified dividend-yield strategy spread across 51 stocks and 21 sectors, with the portfolio anchored in large-cap names that make up 63.32% of holdings.

Mid-caps account for 9.74%, small-caps for 13.62%, with the balance in other instruments.

This tilt toward large-caps keeps the portfolio aligned with stable, cash-generating businesses while leaving room for mid- and small-cap opportunities.

The portfolio leans on banking, healthcare, and autos. This blend reflects the fund’s hunt for companies that can fund consistent dividends while still participating in broader economic growth.

The top holdings span private and public banks, capital goods, and IT – these are established, cash-rich businesses with a track record of rewarding shareholders.

How Has the Fund Performed Over Time?

The table below shows how a lump sum investment of Rs 10,000 would have grown over different investment periods.

Source: Fund Factsheet

Over three years, a Rs 10,000 investment would have grown to Rs 14,239, trailing the benchmark’s Rs 14,847.

The fund beat its benchmark last year, but its short track record means a longer horizon is essential before drawing firm conclusions about its dividend yield approach.

#2 ICICI Prudential Dividend Yield Equity Fund

Next on the list is ICICI Prudential Dividend Yield Equity Fund.

As of 31 May 2026, the fund manages assets worth Rs 64.77 bn, placing it second by AUM and making it one of the most established performers in the category since its 2014 launch.

If we look at the key risk metrics, the fund’s beta of 0.84 indicates that it has historically moved less than the broader market.

Its standard deviation of 0.76 reflects the portfolio’s volatility, while the Sharpe Ratio of -0.01 signals broadly flat risk-adjusted returns over the measured period, even as its longer-term track record remains the strongest in this group.

How Does the Fund Invest?

The fund follows a diversified dividend-yield strategy across 69 stocks and 22 sectors, with large-caps forming the backbone of the portfolio at 73.53%.

Mid-caps make up 10.64%, small-caps 7.41%, with the remainder in other instruments.

This heavy large-cap orientation reflects a preference for proven, dividend-paying market leaders.

Banking dominates the portfolio at over a fifth of holdings, complemented by healthcare, autos, and energy.

This mix targets sectors known for strong balance sheets and reliable dividend payouts, while retaining exposure to cyclical recovery plays.

The fund’s largest positions sit in private banks, pharma, and energy.

These are blue-chip businesses with the financial muscle to sustain dividends through market cycles.

How Has the Fund Performed Over Time?

The table below shows how a lump sum investment of Rs 10,000 would have grown over different investment periods.

Over five years, a Rs 10,000 investment would have grown to Rs 23,545, well ahead of the benchmark’s Rs 17,948.

This consistent, multi-year outperformance across one-, three-, and five-year horizons makes ICICI Prudential one of the strongest track records in the dividend yield category.

#3 HDFC Dividend Yield Fund

Third on the list is HDFC Dividend Yield Fund.

As of 31 May 2026, the fund manages assets worth Rs 56.11 bn, ranking it third by AUM since its December 2020 launch.

If we look at the key risk metrics, the fund’s beta of 0.91 indicates that it has historically moved broadly in line with, but slightly less than, the wider market.

Its standard deviation of 0.82 reflects the portfolio’s volatility, while the Sharpe Ratio of -0.02 points to subdued risk-adjusted returns over the measured period.

How Does the Fund Invest?

The fund runs the most diversified portfolio in this group, spread across 128 stocks and 29 sectors, with large-caps making up 65.02% of holdings.

Mid-caps account for 23.38%, small-caps 1.15%, with the balance in other instruments.

This broader spread aims to capture dividend opportunities beyond just the largest names.

Banking and autos together make up nearly a third of the portfolio, supported by IT, healthcare, and capital goods.

This combination blends defensive, cash-generating sectors with exposure to India’s manufacturing and consumption themes.

The portfolio’s top names lean heavily on private banking, alongside capital goods and telecom.

These are large, financially robust businesses well-positioned to maintain steady dividend payouts.

How Has the Fund Performed Over Time?

The table below shows how a lump sum investment of Rs 10,000 would have grown over different investment periods.

Over five years, a Rs 10,000 investment would have grown to Rs 20,074, ahead of the benchmark’s Rs 17,948.

While the fund slipped behind its benchmark over the past year, its strong three- and five-year numbers and a category-leading since-inception return show its diversified approach has built wealth over longer horizons.

#4 UTI Dividend Yield Fund

Fourth on the list is UTI Dividend Yield Fund, one of the oldest schemes in the category.

As of 31 May 2026, the fund manages assets worth Rs 3,697.48 crore, ranking fourth by AUM, with a track record stretching back to its 2005 launch.

If we look at the key risk metrics, the fund’s beta of 0.76 indicates that it has historically moved less than the broader market.

Its standard deviation of 0.70 reflects the portfolio’s volatility, the tightest in the group, while the Sharpe Ratio of -0.02 points to muted risk-adjusted returns over the measured period.

How Does the Fund Invest?

The fund follows a diversified dividend-yield strategy across 55 stocks and 24 sectors, with large-caps forming the core at 62.42% of holdings.

Mid-caps make up 7.53%, small-caps 20.32%, with the balance in other instruments, giving it the highest small-cap allocation among these five funds.

Banking leads the portfolio at over a fifth of holdings, followed by healthcare, IT, and autos.

How Has the Fund Performed Over Time?

The table below shows how a lump sum investment of Rs 10,000 would have grown over different investment periods.

Over five years, a Rs 10,000 investment would have grown to Rs 18,360, narrowly ahead of the benchmark’s Rs 17,948.

The fund’s three-year showing is its standout, comfortably beating the benchmark, though its near-flat one-year return is a reminder that dividend yield strategies can lag in fast-moving markets.

#5 Franklin India Dividend Yield Fund

Last on the list is Franklin India Dividend Yield Fund, a long-running scheme that uses a value strategy to invest in stocks with attractive dividend yields.

As of 31 May 2026, the fund manages assets worth Rs 23.17 bn, the smallest in this group by AUM, despite being among the oldest with a 2006 launch.

If we look at the key risk metrics, the fund’s beta of 0.74 indicates that it has historically moved less than the broader market.

Its standard deviation of 0.71 reflects the portfolio’s volatility, while the Sharpe Ratio of -0.03 points to the softest risk-adjusted returns in this group over the measured period.

How Does the Fund Invest?

The fund runs a concentrated, value-driven portfolio of just 40 stocks across 18 sectors, with large-caps making up 55.12% of holdings.

Mid-caps account for 10.45%, small-caps 12.7%, with the balance in other instruments.

This focused, value-oriented approach reflects a deliberate hunt for under-appreciated, high-yielding businesses.

Unlike its peers, the fund balances banking with a heavy weighting in power and IT, alongside FMCG and energy.

This spread reflects its value tilt, leaning into sectors where dividends are strong and valuations remain reasonable.

Source: Fund Factsheet

The portfolio mixes public-sector heavyweights like SBI and NTPC with private banks and IT.

This reflects the fund’s value approach, seeking out cash-generating businesses, including PSUs, that offer dependable dividends at attractive prices.

How Has the Fund Performed Over Time?

The table below shows how a lump sum investment of Rs 10,000 would have grown over different investment periods.

Over five years, a Rs 10,000 investment would have grown to Rs 18,583, ahead of the benchmark’s Rs 17,948.

The fund’s concentrated, value-led approach has edged out the benchmark over five years, though its recent one and three-year numbers show that a value strategy can take time to play out.

Conclusion

The above list tells us that size and performance don’t travel together. SBI sits at the top with the biggest corpus in the category, yet it’s the youngest and least battle-tested.

Franklin is the oldest of the bunch but carries the smallest AUM. And ICICI Prudential quietly owns the strongest multi-year track record of the five.

So, while AUM tells you where investor money has gathered, it does not show where returns are headed. 

Also, notice how similar their portfolios look… banks, IT, autos, healthcare, the same cash-rich names appearing again and again.

The real differences are subtler: UTI leans hardest into small-caps, HDFC runs the most diversified book at 128 stocks, and Franklin takes the most concentrated, value-driven bets.

One more thing worth noticing: every fund on this list has posted a near-flat or negative one-year number and muted risk-adjusted ratios. 

This is testament to the fact that dividend yield funds aren’t built to win the sprint. They’re built for resilience, for owning durable businesses that keep paying when the market’s excitement fades.

Treat this list as a shortlist, not a buy list. Check the fund’s expense ratio, study the portfolio yield, and stress-test each fund in ugly markets before you commit a rupee.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here…

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