Dividend Payout Vs Growth NAV value significance

#1
Hi Investors,

I would like to know a basic difference between Growth and Dividend options in mutual funds.

I have the basic idea that Growth is for long term investment and Dividend option is for income at short intervals. Lets take a example of buying 100 shares of Growth and Dividend both of say X mutual fund.

100 * 10(NAV) on 15th July = 1000 Rs (Growth)
100 * 5 (NAV) on 15th July = 500 Rs (dividend)

Now after a year

100 * 14(NAV after an year) on 15th July 2017 = 1400 Rs
100 * 6 (NAV after an year) on 15th July 2015 = 600 Rs

I plan to sell off my units for both Dividend and Growth option now the Profit I should be expecting is the total NAV amount for both Growth as well as Dividend units(+any dividend paid in 1 year).

Basically the NAV of Dividend option increases is also in my profit right?Whenever I plan to sell, It would be my profit whatever the current NAV is in dividend option apart from the dividend paid?

Kindly help.


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niftygupshup

Well-Known Member
#2
Sorry didnt get, what you want to know, but what I understand from your post. I am replying


The payout will be, in case of Growth scheme
no. of units x NAV (growth scheme)

And in case of dividend payout scheme
no. of units x NAV (dividend scheme)
Suppose equal to Y
Then total money receipt will be Y + divided amount, if any.
 
#3
Thanks!!


So that basically means if the Dividend Scheme NAV is going upper I should be happy about that too right? I would give me dividend in the meantime as well as NAV*no. of units am holding when I plan to sell them off?


I am not concerned about the rate at which NAV will go up or when they give the dividend basically NAV comes down for dividend scheme.But am concerned about when am planning to sell at that time the current NAV value * no. of units is the amount which I can cash?
 
#5
Thanks!!


So that basically means if the Dividend Scheme NAV is going upper I should be happy about that too right? I would give me dividend in the meantime as well as NAV*no. of units am holding when I plan to sell them off?


I am not concerned about the rate at which NAV will go up or when they give the dividend basically NAV comes down for dividend scheme.But am concerned about when am planning to sell at that time the current NAV value * no. of units is the amount which I can cash?
NAV in dividend payout scheme will always be less than NAV in growth scheme if the other conditions are same.Dividend is paid by the fund after paying almost 28% dividend distribution tax to Government.

Smart_trade
 
#6
Ok...so tax and all is fine.


But suppose NAV of my dividend payout option is 5 rs more than the NAV at which i bought the fund...that means

5*no. of units I have taken = my profit? no tax or anything in that.


I understand that NAV of growth will be higher and nav of dividend payout remains lower because the dividend is paid on regular intervals.

Thanks
 

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