The Hindu Business Line : Principal PNB launches dividend yield plan

(From left) Mr Sanjay Sachdev, MD & CEO, Principal PNB Asset Management, with Mr Rajat Jain, Chief Investment Officer, and Mr Shyam Bhat, Asst Vice-President, Investment, at a press conference in Mumbai on Monday. - Paul Noronha

Mumbai , Sept. 6

PRINCIPAL PNB Asset Management in partnership with Vijaya Bank launched the Principal Dividend Yield Fund on Monday.

This equity fund would combine the equity market returns with the cushion of high dividend income from stocks, according to the AMC.

Up to 65 per cent of the fund's allocation would be in stocks that have a dividend yield of at least 1.5 times that of NSE Nifty. The balance would be invested in other equities with likelihood of share buybacks, expectations of higher dividend in the current year on account of a likely improvement in performance, one time cash inflow by way of sale of a business etc.

"Returns from equity funds have two components, capital appreciation and dividend income from stocks. In these volatile times, focus on capturing dividends from these stocks adds significant value to the investors," said Mr Sanjay Sachdev, Managing Director and Chief Executive Officer, Principal PNB AMC.

The high dividend yield stocks that would be picked for the fund would also be value picks that have declared consistent dividends.

"The universe of scrips that would qualify for this fund would be between 50-60," said Mr Rajat Jain, Chief Investment Officer, Principal PNB AMC.

Some examples of stocks that qualify as high dividend yield are Andhra Bank, Bank of Baroda, BPCL, Finolex Industries etc., said Mr Shyam Bhat, Equity Fund Manager, Principal AMC.

The initial public offering of the fund remains open from September 6 - 27.

The minimum application amount during the IPO is Rs 5,000.

While there is no entry load on application during the IPO, 2.25 per cent of amount invested would be charged as entry load on an ongoing basis.

Exit load of 1.5 per cent will be levied for redemptions within six months, according to the AMC.