Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Dividend Fund

What it is:

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

How it works (Example):

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 it Matters:

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.