Dividend mutual funds invest in companies that regularly share profits with shareholders.
Instead of focusing only on fast-growing stocks, these funds look for businesses that generate steady cash flows and pay consistent dividends.
For many investors, this creates a balance between income and long-term growth.
In this editorial, we look at the highest dividend-paying funds in India.
We break down their portfolios, sector exposure, risk metrics, and long-term performance.
This dividend mutual fund list will help you understand how each fund works and how it has performed over time.
#1 ICICI Pru Dividend Yield Equity Fund
First we have ICICI Prudential Dividend Yield Equity Fund, which focuses on companies that regularly share profits with investors through dividends.
As of December 2025, the fund manages around Rs 64 billion (bn). The fund looks for companies where dividends are stable and can grow over time, along with potential for stock price appreciation.
In terms of performance metrics, the fund has a 1.55% dividend yield.
A Sharpe ratio of 1.38 shows that returns have been strong relative to the risk taken, while a beta of 0.85 suggests lower sensitivity to overall market movements.
Where Does the Fund Invest?
The largest exposure is to Financial Services, including banks and financial institutions. These sectors generally benefit when the economy expands.
At the same time, the fund invests in relatively stable sectors like Healthcare and Power. This mix indicates exposure to both growth-oriented and comparatively defensive segments.
Sector Allocation (December 2025)
| Sector | Allocation % |
| Financial Services | 29.15% |
| Oil, Gas & Consumable Fuels | 10.13% |
| Healthcare | 7.08% |
| Power | 6.82% |
| Petroleum Products | 5.44% |
| Pharmaceuticals & Biotechnology | 5.41% |
Source: Fund Factsheet
Most holdings are large-cap companies with established businesses and stable cash flows.
The portfolio includes both private sector companies and government-owned firms. This typically reduces business risk compared to smaller or newer companies.
Top Stock Holdings (December 2025)
| Stock Name | Allocation % |
| ICICI Bank Ltd. | 7.22% |
| HDFC Bank Ltd. | 5.82% |
| NTPC Ltd. | 5.72% |
| Sun Pharmaceutical Industries Ltd. | 5.41% |
| Axis Bank Ltd. | 4.28% |
Source: Fund Factsheet
How the Fund has Grown Over Time
Over the past one, three, and five years, the fund has delivered higher returns than its primary benchmark, the Nifty 500 TRI.
A Rs 10,000 investment grew to over Rs 30,000 in five years. Compared to both benchmarks, the scheme has shown stronger long-term compounding during this period.
Compared to both benchmarks, the scheme has shown better long-term compounding.
Rs 10,000 Investment Growth Comparison (December 2025)
| Particulars | 1 Year CAGR (%) | 1 Year Value | 3 Years CAGR (%) | 3 Years Value | 5 Years CAGR (%) | 5 Years Value |
| Scheme | 11.85 | Rs11,185 | 23.35 | Rs18,791 | 24.71 | Rs30,187 |
| Nifty 500 TRI (Benchmark) | 7.76 | Rs10,776 | 16.68 | Rs15,897 | 17.29 | Rs22,210 |
| Nifty 50 TRI (Additional Benchmark) | 11.88 | Rs11,188 | 14.29 | Rs14,941 | 14.67 | Rs19,832 |
Source: Fund Factsheet
#2 LIC MF Dividend Yield Fund
Second we have LIC MF Dividend Yield Fund. It was launched on December 2018, and as of December 2025, it manages around Rs 6.9 bn in assets.
In terms of performance metrics, a standard deviation of 14.9% reflects moderate to slightly higher volatility typical of diversified equity funds.
A Sharpe ratio of 1.01 indicates returns have been proportionate to the level of risk taken, while a beta of 1.06 suggests slightly higher sensitivity to overall market movements.
Where Does the Fund Invest?
The fund invests across multiple sectors. The highest exposure is to Banks, followed by IT and Industrial companies.
This positioning indicates exposure to sectors that tend to perform well during economic expansion.
At the same time, the portfolio also includes Pharma and FMCG stocks, which are generally more stable during weaker market conditions.
Overall, the allocation reflects a mix of cyclical and relatively defensive sectors.
Sector Allocation (December 2025)
| Sector | Allocation % |
| Banks | 17.62% |
| IT – Software | 7.53% |
| Industrial Products | 7.30% |
| Finance | 6.70% |
| Automobiles | 5.43% |
| Electrical Equipment | 4.96% |
| Pharmaceuticals & Biotech | 4.14% |
| Diversified FMCG | 3.90% |
Source: Fund Factsheet
Most of the top holdings are large, established companies with strong market positions and stable cash flows.
The portfolio is tilted toward private-sector companies, while also including select public-sector firms.
Top Stock Holdings (December 2025)
| Stock Name | Allocation % |
| HDFC Bank Ltd. | 6.82% |
| Tata Consultancy Services Ltd. | 3.71% |
| ICICI Bank Ltd. | 3.62% |
| Kotak Mahindra Bank Ltd. | 3.39% |
| Axis Bank Ltd. | 2.90% |
Source: Fund Factsheet
How the Fund has Grown Over Time
Over one year, the scheme delivered lower returns compared to both benchmarks. Over 3-5 years, performance remained good, although benchmarks showed stronger compounding in certain periods.
Rs 10,000 Investment Growth Comparison (December 2025)
| Particulars | 1 Year CAGR (%) | 1 Year Value | 3 Years CAGR (%) | 3 Years Value | 5 Years CAGR (%) | 5 Years Value |
| Scheme | 4.39% | 10,439 | 7.76% | 18,608 | 11.88% | 11,188 |
| Nifty 500 TRI | 7.76% | 10,776 | 16.68% | 15,897 | 14.29% | 14,941 |
| Nifty 50 TRI | 11.88% | 11,188 | 16.87% | 21,808 | 14.67% | 19,832 |
Source: Fund Factsheet
#3 UTI Dividend Yield Fund
Third we have UTI Dividend Yield Fund. It was launched on May 2005. As of January 2026, the fund manages Rs 38.8 bn in assets.
The strategy follows a dividend-yield approach with about 71% of the portfolio invested in large companies.
In terms of performance metrics, the fund’s standard deviation stands at 11.85%, indicating relatively moderate price movements.
A Sharpe ratio of 1.25 reflects strong risk-adjusted performance. With a beta of 0.89, the fund has historically tracked the broader market slightly less closely.
Where Does the Fund Invest?
The portfolio consists of 52 stocks. Financial Services and Information Technology together account for 42% of the allocation.
Sector Allocation (January 2026)
| Sector | Allocation % |
| Financial Services | 29% |
| Information Technology | 13% |
| Healthcare | 9% |
| Automobile & Auto Components | 9% |
| Oil, Gas & Consumable Fuels | 8% |
Source: Fund Factsheet
A majority of the portfolio is invested in large-cap companies. The holdings include both private sector leaders and public sector companies.
Large-cap exposure generally indicates higher liquidity and relatively lower volatility compared to mid-cap or small-cap focused funds.
Top 10 Holdings (January 2026)
| Stock Name | Allocation % |
| HDFC Bank Ltd. | 8.38% |
| ICICI Bank Ltd. | 5.24% |
| Tech Mahindra Ltd. | 4.04% |
| State Bank of India | 3.86% |
| Infosys Ltd. | 3.36% |
Source: Fund Factsheet
How the Fund has Grown Over Time
Over one year, returns were broadly in line with benchmarks. Across three and five years, performance remained competitive, with differences across indices reflecting variations in sector allocation and positioning.
Rs 10,000 Investment Growth Comparison (January 2026)
| Particulars | 1 Year CAGR (%) | 1 Year Value (Rs) | 3 Years CAGR (%) | 3 Years Value (Rs) | 5 Years CAGR (%) | 5 Years Value (Rs) |
| Scheme | 6.85% | 10,685 | 20.35% | 17,440 | 18.34% | 23,220 |
| Nifty 500 TRI | 7.98% | 10,798 | 16.71% | 15,904 | 16.53% | 21,497 |
| Nifty Dividend Opportunities 50 TRI | 6.53% | 10,653 | 20.52% | 17,514 | 20.45% | 25,366 |
| Nifty 50 TRI | 8.97% | 10,897 | 14.07% | 14,848 | 14.53% | 19,713 |
Source: Fund Factsheet
#4 Aditya Birla SL Dividend Yield Fund
Fourth is Aditya Birla Sun Life Dividend Yield Fund, which launched on February 2003, making it one of the older funds in this category. The fund manages assets worth Rs 15.1 bn.
In terms of performance metrics, the fund offers a 2.39% dividend yield. With a standard deviation of 13.98%, it reflects moderate volatility.
A Sharpe ratio of 1 indicates returns have been proportionate to the level of risk taken, while a beta of 0.9 suggests slightly lower sensitivity to overall market movements.
Where Does the Fund Invest?
The largest exposure is to IT and Banking. The presence of FMCG and Power adds relatively stable sectors to the portfolio.
Sector Allocation (January 2026)
| Sector | Allocation % |
| IT – Software | 16.10% |
| Banks | 11.81% |
| Diversified FMCG | 9.54% |
| Finance | 7.43% |
| Power | 6.45% |
Source: Fund Factsheet
The top holdings include a mix of large private sector companies and public sector enterprises. Many of these companies have stable earnings profiles and consistent dividend histories.
Top 10 Holdings (January 2026)
| Stock Name | Allocation % |
| Power Finance Corporation Limited | 7.07% |
| Infosys Limited | 4.95% |
| State Bank of India | 4.37% |
| Multi-Commodity Exchange of India Limited | 4.30% |
| NTPC Limited | 4.21% |
Source: Fund Factsheet
How the Fund has Grown Over Time
Over one year, the scheme delivered lower returns compared to the benchmarks.
Over three years, a Rs 10,000 investment grew to Rs 16,974, and over five years it increased to Rs 24,323.
Compared with the indices, performance varied across periods, reflecting differences in sector allocation and portfolio strategy.
Rs 10,000 Investment Growth Comparison (January 2026)
| Particulars | 1 Year CAGR (%) | 1 Year Value | 3 Years CAGR (%) | 3 Years Value | 5 Years CAGR (%) | 5 Years Value |
| Scheme | 2.29% | Rs10,229 | 19.25% | Rs16,974 | 19.44% | Rs24,323 |
| Nifty 500 TRI (Benchmark) | 7.76% | Rs10,776 | 16.68% | Rs15,897 | 16.87% | Rs21,808 |
| Nifty Dividend Opportunities 50 TRI | 4.09% | Rs10,409 | 21.30% | Rs17,866 | 20.19% | Rs25,090 |
| Nifty 50 TRI (Additional Benchmark) | 11.88% | Rs11,188 | 14.29% | Rs14,941 | 14.67% | Rs19,832 |
Source: Fund Factsheet
#5 Franklin India Dividend Yield Fund
Lastly, we have Franklin India Dividend Yield Fund (formerly Templeton India Dividend Yield Fund). It was launched on May 2006.
As of January 2025, the fund manages assets worth Rs 24.2 bn. The strategy requires at least 65% of the portfolio to be invested in dividend-yielding stocks, focusing on companies with a consistent track record of profit distribution.
In terms of performance metrics, the fund’s standard deviation of 3.46% indicates relatively contained price movements during the measured period.
A Sharpe ratio of 0.8 shows that returns have been proportionate to the level of risk taken, and a portfolio beta of 0.98 suggests that the fund has largely moved in line with the broader market.
Where Does the Fund Invest?
The portfolio has meaningful exposure to IT and Power, along with a notable allocation to Real Estate Investment Trusts (REITs).
Sector Allocation (January 2026)
| Sector | Allocation % |
| IT – Software | 12.84% |
| Power | 10.16% |
| Real Estate Investment Trusts (REITs) | 10.05% |
| Banks | 8.62% |
| Petroleum Products | 4.60% |
| Aerospace & Defence | 4.31% |
Source: Fund Factsheet
The holdings include a mix of public sector enterprises and large IT companies. Many of these businesses are known for relatively stable operating cash flows.
Top 10 Holdings (January 2026)
| Stock Name | Allocation % |
| NTPC Ltd. | 5.08% |
| Infosys Ltd. | 4.89% |
| HCL Technologies Ltd. | 3.93% |
| GAIL (India) Ltd. | 2.91% |
| Tata Consultancy Services Ltd. | 2.88% |
Source: Fund Factsheet
How the Fund has Grown Over Time
Over one year, the scheme delivered lower returns compared to both benchmarks. Over three years, a Rs 10,000 investment grew to Rs 16,149, and over five years it increased to Rs 24,967.
Rs 10,000 Investment Growth Comparison (January 2026)
| Particulars | 1 Year CAGR (%) | 1 Year Value (Rs) | 3 Years CAGR (%) | 3 Years Value (Rs) | 5 Years CAGR (%) | 5 Years Value (Rs) |
| Scheme | 4.22% | 10,421 | 17.32% | 16,149 | 20.06% | 24,967 |
| Nifty 500 TRI | 8.00% | 10,798 | 17.02% | 16,026 | 18.31% | 23,206 |
| Nifty 50 TRI | 9.00% | 10,897 | 14.08% | 14,848 | 14.52% | 19,714 |
Source: Fund Factsheet
Conclusion
Dividend mutual funds aim to combine regular income with equity growth. Each fund in this dividend mutual funds list follows its own strategy, sector allocation, and risk profile.
While some funds show stronger long-term compounding, others focus more on stability.
If you are exploring the Dividend Yield Mutual Funds to invest in India 2026, reviewing portfolio mix, volatility, and historical consistency can help you compare options more clearly.
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