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1. Dividend Payout Option (Regular Dividend)
- The mutual fund pays the dividend directly to you.
- It is credited to your bank account linked to the mutual fund.
- Example:
If the fund receives ₹10 lakh in dividends from companies, it distributes part of that to investors based on units held.
⭐ 2. Dividend Reinvestment Option
- The dividend does not come to your bank.
- Instead, the fund uses that dividend to buy more units of the same scheme for you.
- Your unit count increases, but the NAV may adjust after distribution.
⭐ 3. Growth Option (Most Common Today)
- In growth funds no dividend is paid out at all.
- All dividends received from stocks are reinvested back into the fund automatically.
- This increases the NAV over time.
- You get the benefit when you sell the units.
📌 Important
Mutual funds don’t keep the dividends as profit. They must allocate them based on the scheme you selected (Payout / Reinvestment / Growth).
