In Love With Dividend? Check These Best Dividend Yield Mutual Funds With Highest Returns In 3 Years

Dividend Yield Mutual Funds: Many investors have a special interest towards dividends, a part of the profit earned by companies that they intend to share among shareholders. While it is better to invest in dividend-paying stocks to get the direct benefit, risk-averse investors can consider parking their money in dividend-yield mutual funds.

Dividend yield mutual funds are equity funds that invest primarily in equity and equity-associated instruments of companies that are known to declare high dividends. As dividends are announced only when a company is profitable, dividend yield mutual funds mainly invest in profitable companies.

What is A Dividend Yield Mutual Fund?

A dividend yield mutual fund is a type of equity fund that focuses on equity and equity-associated instruments of companies. Generally, a dividend yield mutual fund invests around 70-80% of its portfolio in stocks which which pay higher dividends compared to the industry average.

Best Dividend-Yield Mutual Funds

The best dividend-yield mutual fund (MF) has offered a direct return of up to 30% in three years. The top eight dividend yield mutual fund schemes have offered more than 20% returns for three years, according to the Association for Mutual Funds In India (AMFI) data, as on June 19, 2025.

ICICI Prudential Dividend Yield Mutual Fund, LIC MF Dividend Yield Fund, HDFC Dividend Yield Fund, UTI Dividend Yield Fund are some of the mutual fund schemes ranking among the top 8 dividend yield MF scheme.

Scheme Name	Benchmark	Latest NAV (₹) - Direct	3-Year Return (%) - Regular	3-Year Return (%) - Direct
ICICI Prudential Dividend Yield Equity Fund	Nifty 500 TRI	57.5400	28.22	30.01
LIC MF Dividend Yield Fund	Nifty 500 TRI	32.8592	27.29	28.76
Aditya Birla Sun Life Dividend Yield Fund	Nifty 500 TRI	483.2300	26.20	27.17
HDFC Dividend Yield Fund	Nifty 500 TRI	26.1220	24.76	26.39
UTI Dividend Yield Fund	Nifty 500 TRI	186.7637	23.77	24.52
Tata Dividend Yield Fund	Nifty 500 TRI	18.8652	21.74	23.87
Sundaram Dividend Yield Fund	Nifty 500 TRI	144.8998	20.31	21.76
Templeton India Equity Income Fund	Nifty 500 TRI	148.6416	20.60	21.60

Benefits of Dividend Yield

One of the major benefits of dividend yield mutual funds is that they provide a stable source of income and invest in profitable companies that are comparatively more stable. While dividend announcements by companies under mutual funds' portfolio will benefit MFs, the company needs to book a profit on its holdings to provide dividends to investors.

Companies that provide dividends to their shareholders regularly are assumed to be stable and well-known in the market, with a strong brand recall value.

As most of these companies have a substantial market capitalisation, the risk factor with investment in such firms is also lower. Hence, mutual funds which invest in such companies are likely to be lesser vulnerable to short-term market volatility.