Investment 101 | Dividend Funds
When it comes to financial planning, many people share a simple wish: to have a relatively steady stream of periodic cash flow, even in a market that's always changing—so you can feel more at ease without having to stress over day-to-day ups and downs.
If that sounds like you, dividend funds might be worth exploring.
What is a dividend fund?
In simple terms, the dividend fund is a fund that regularly distributes part of the income generated by its portfolio—such as interest, dividends, or realized capital gains—to investors.
💡 Note: A distribution is not a guaranteed return. Distribution amounts may increase, decrease, or be suspended, and the fund's NAV can fluctuate with market conditions.
Dividend funds vs. dividend stocks
Similarities:
• Both can provide regular cash payouts (dividends/distributions).
• Payout amounts can be affected by market conditions and are not fixed.
Differences:
| Dividend funds | Dividend stocks | |
| What you're investing in | Dividend funds typically invest across a diversified basket of assets (such as stocks and bonds). | Dividend stocks are shares of a single company. |
| How they're managed | Funds are managed by a fund manager based on a strategy and are rebalanced periodically. | With stocks, investors generally need to select and manage their own holdings. |
Key features of dividend funds
💡 Tip: Don't only focus on distribution yield. Also consider long-term performance, volatility, fees, whether distributions are paid from capital, and whether the fund matches your risk tolerance.
Want to see what dividend funds are available and how they're doing? Check the Dividend Funds list at ZA Bank App now, filter by your needs, and find what fits you best.
Important risk statement
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