Table of Contents

How do mutual funds pay dividends?

What are the different types of dividend mutual funds?

What are the highest dividend ETFs and mutual funds?

The bottom line

LearnMutual FundsHow Do Dividend Mutual Funds Work?

How Do Dividend Mutual Funds Work?

Jun 21, 2022


4 min read

Mutual funds allow investors to secure diversification within their portfolios. Here's our complete guide to understanding the different types of dividend mutual funds.

Companies share profits with shareholders via regular payments called dividends. Dividend mutual funds invest in stocks and pay regular dividends to their investors. These are per-share payments, which means the more shares an investor owns, the higher their dividends. The investor owns dividend stocks of companies through the mutual fund; they then receive the dividend through the mutual funds, typically quarterly. The investor can either reinvest the dividends or opt for cash dividends. 

Dividend mutual funds usually aim to invest in shares of companies known for high and consistent returns. When investing in a fund, investors can either make a reinvestment plan with their dividends to buy more shares rather than receive the dividend income immediately.

How do mutual funds pay dividends?

Mutual funds can be thought of as a collection of securities or a pool of investments that pay shareholders dividends. Different mutual funds have different payment timelines. For example, some pay quarterly, while others pay monthly dividends. 

Investors receive dividend payments after expenses, meaning the investor typically should expect a low personal cost when investing in a dividend mutual fund. Dividend mutual funds allow investors to assume less risk when investing in a dividend stock. By pooling many stocks that pay dividends, the individual investors will likely not notice significant changes if one stock no longer pays dividends.

What are the different types of dividend mutual funds?

Dividend mutual funds focus on different objectives. Some dividend mutual funds focus on ensuring a high yield, while others focus on growth by increasing the number of their dividends. Funds also vary in the minimum investment required and the rate of the fund expenses.

Dividend ETFs

Dividend exchange-traded funds—or ETFs—are another alternative to dividend mutual funds. Essentially, these are a diversified collection of dividend-paying stocks that aim to resemble the market index as closely as possible. The difference between a dividend ETF and a mutual fund is that ETFs are traded like stocks, and their value can fluctuate throughout the day, while a mutual fund's value changes only once daily. ETFs typically have an expense ratio that's taken out of the investor's dividends. As with mutual funds, different ETFs will have different yields and expenses. Typically, ideal dividend ETFs have high yields and low expenses.

At Titan, we are value investors: we aim to manage our portfolios with a steady focus on fundamentals and an eye on massive long-term growth potential. Investing with Titan is easy, transparent, and effective.

Get Started

What are the highest dividend ETFs and mutual funds?

Investors consider several factors when choosing a dividend ETF or mutual fund. The first is the dividend yield, determined by how much a company pays relative to the share price. The dividend yield is presented as a percentage and allows investors to measure a fund's performance. A high yield ETF allows an investor to grow their capital quickly.

When investing in an ETF, investors should also ensure the fund is in stocks rather than bonds. The size of the stock, determined by how much a company pays relative to the share price, also comes into play; large-cap funds tend to be the least risky.

Dividend ETFs list:

  • Schwab US Dividend Equity ETF (SCHD).

    This ETF outperformed the S&P 500 in returns in the first half of 2021. It’s composed of companies with a reputation for consistently paying dividends.

  • Invesco S&P Ultra Dividend Revenue ETF (RDIV).

    Based on the S&P 900 Dividend Revenue-Weighted Index, this fund consists of 60 stocks selected from the S&P 500 and the S&P Midcap 400 Indexes.

  • SPDR Portfolio S&P 500 High Dividend ETF (SPYD).

    As the name suggests, this ETF consists of 80 top S&P 500 dividend stocks.

  • Vanguard High Dividend Yield ETF (VYM).

    This diversified ETF holds 412 stocks, ensuring investors will notice only minor fluctuations if a company stops paying dividends.

  • Vanguard Real Estate ETF.

    This fund invests exclusively in real estate investment trusts or “REITs.” It invests in various high-yield REITs.

Dividend mutual funds list:

  • The Vanguard High Dividend Yield Index Admiral Shares (VHYAX).

    Made up of companies that have a record of consistently producing high-yield dividends for investors, this mutual fund has a very low cost ratio of just .08%.

  • Fidelity Dividend Growth Fund.

    A large-cap growth fund consisting of diversified domestic assets that has been actively managed for 25 years.

  • The Columbia Dividend Opportunity Fund (INUTX).

    Since its inception in 1988, this fund aims to include companies with a consistent history of paying dividends. It requires a minimum $2,000 investment, with an expense ratio of 1.05%.

  • The Federated Strategic Value Dividend Fund (SVAAX).

    Consisting of companies with high monthly dividends for investors and an emphasis in growth stocks, this fund has a relatively low minimum investment of $1,500 with a 1.06% expense ratio.

  • The Neuberger Berman Equity Income Fund (NBHAX).

    Founded in 2005, this fund’s diverse investments include REITs, bonds, stocks, put options, and call options. Currently, its minimum initial investment is $1,000.

  • The T. Rowe Price Dividend Growth Fund (PRDGX).

    Since its inception in 1993, this fund aims to invest in companies with a strong past performance and increase dividends over time for high returns. It has a low expense ratio of .63%.

The bottom line

Mutual funds and ETFs allow investors to secure diversification within their portfolios. Diversified funds also help investors withstand volatility in the market. For example, if one company in a fund stops paying dividends, the investor will likely only notice a minimal change in their dividend income. As an investment, mutual funds that offer dividends can give investors significant capital gain with low risk and costs. A dividend investment strategy can help investors grow their portfolios or provide steady dividend income for years.


Certain information contained in here has been obtained from third-party sources. While taken from sources believed to be reliable, Titan has not independently verified such information and makes no representations about the accuracy of the information or its appropriateness for a given situation. In addition, this content may include third-party advertisements; Titan has not reviewed such advertisements and does not endorse any advertising content contained therein.

This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any strategy managed by Titan. Any investments referred to, or described are not representative of all investments in strategies managed by Titan, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results.

Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see Titan’s Legal Page for additional important information.

Three Things, a newsletter from Titan

Stay informed on the most impactful business and financial news with analysis from our team.

You might also like

How High-Yield Money Market Accounts Work

High-yield money market accounts have higher-than-average annual percentage yields that help savings accounts to grow over time.

Read More

What Is a Mutual Fund?

A mutual fund is a type of investment that pools a group of investors’ resources to access a bundle of stocks, bonds, or other securities.

Read More

Growth Stock Mutual Funds Explained

Learn how mutual fund investments are an option for achieving a way to generate growth, allowing investors to buy fractional shares of many different securities at once.

Read More

Mutual Funds vs. Stocks: Pros and Cons of Each

Many investors choose a diversified approach for their investment portfolio, often including mutual funds and stocks. Learn how each investment type has its benefits.

Read More

Cash Management

Smart Cash

Smart Cash FAQs

Cash Options


© Copyright 2024 Titan Global Capital Management USA LLC. All Rights Reserved.

Titan Global Capital Management USA LLC ("Titan") is an investment adviser registered with the Securities and Exchange Commission (“SEC”). By using this website, you accept and agree to Titan’s Terms of Use and Privacy Policy. Titan’s investment advisory services are available only to residents of the United States in jurisdictions where Titan is registered. Nothing on this website should be considered an offer, solicitation of an offer, or advice to buy or sell securities or investment products. Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections are hypothetical in nature and may not reflect actual future performance. Account holdings and other information provided are for illustrative purposes only and are not to be considered investment recommendations. The content on this website is for informational purposes only and does not constitute a comprehensive description of Titan’s investment advisory services.

Please refer to Titan's Program Brochure for important additional information. Certain investments are not suitable for all investors. Before investing, you should consider your investment objectives and any fees charged by Titan. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested, including principal. Brokerage services are provided to Titan Clients by Titan Global Technologies LLC and Apex Clearing Corporation, both registered broker-dealers and members of FINRA/SIPC. For more information, visit our disclosures page. You may check the background of these firms by visiting FINRA's BrokerCheck.

Various Registered Investment Company products (“Third Party Funds”) offered by third party fund families and investment companies are made available on the platform. Some of these Third Party Funds are offered through Titan Global Technologies LLC. Other Third Party Funds are offered to advisory clients by Titan. Before investing in such Third Party Funds you should consult the specific supplemental information available for each product. Please refer to Titan's Program Brochure for important additional information. Certain Third Party Funds that are available on Titan’s platform are interval funds. Investments in interval funds are highly speculative and subject to a lack of liquidity that is generally available in other types of investments. Actual investment return and principal value is likely to fluctuate and may depreciate in value when redeemed. Liquidity and distributions are not guaranteed, and are subject to availability at the discretion of the Third Party Fund.

The cash sweep program is made available in coordination with Apex Clearing Corporation through Titan Global Technologies LLC. Please visit for applicable terms and conditions and important disclosures.

Cryptocurrency advisory services are provided by Titan.

Information provided by Titan Support is for informational and general educational purposes only and is not investment or financial advice.

Contact Titan at 508 LaGuardia Place NY, NY 10012.