New Delhi, Aug. 16 -- Dividend yield funds invest in companies that regularly pay dividends to their shareholders. However, this should not be confused with the fund paying a guaranteed dividend to investors. Instead, the fund receives dividends from the companies in its portfolio.

As per Securities and Exchange Board of India (SEBI) regulations, these equity funds must invest at least 65% of their assets in dividend-yielding stocks. Dividend yield is a financial ratio that measures a company's annual dividend payout relative to its share price.

Fund managers typically select companies with dividend yields higher than the broader market. These funds can generate returns through both capital appreciation and dividend income from the stoc...