Dividend

Investments

Dividend is a share of company profits distributed to shareholders. Post-2020, dividends are fully taxable at slab rate in the hands of recipient. TDS at 10% if dividend exceeds Rs 5,000/year.

In detail

Mutual fund dividends are now called IDCW (Income Distribution cum Capital Withdrawal) -- SEBI renamed to clarify that payouts come from accumulated NAV (your own money), not company profits. Growth option is almost always better for wealth accumulation due to tax deferral.

Formula

Dividend yield = Annual dividend per share / Market price x 100

Real-life example

🇮🇳 India example

HDFC Bank declares Rs 19/share dividend. Mohan holds 500 shares. Gross Rs 9,500. TDS Rs 950. At 30% bracket, total tax Rs 2,850. Net Rs 6,650.

Frequently asked questions

Growth vs dividend option in mutual funds? ▼

Growth option almost always better for accumulation -- defers tax, compounds fully. IDCW creates immediate tax liability.