What is a Dividend Fund?

A dividend fund is a type of mutual fund which invests exclusively in equity shares which pay regular dividends.

How Does a Dividend Fund Work?

A dividend fund seeks to provide investors with income from common and preferred shares of stock which yield dividends in cash and stock (in some cases) on a regularly-occurring basis. It is the opposite of a growth fund, which seeks to provide investors with long-term appreciation of capital.

Why Does a Dividend Fund Matter?

A dividend fund is a good choice for investors seeking regular income payments over appreciation. Investors should be aware that a poor market climate might result in certain companies' not paying dividends along with decreased fund value.