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Top monthly dividend paying mutual funds...
Do Mutual Funds Pay Dividends or Interest?
Depending on the type of investments included in the portfolio, mutual funds may pay dividends, interest, or both.
Mutual fund dividend payout dates
Key Takeaways
- Mutual funds can pay dividends, interest, or both depending on the types of investments in their portfolios, such as stocks for dividends and bonds for interest.
- Stock funds pay dividends if the underlying stocks do, while bond funds pay interest through bond coupon payments; balanced funds may provide both.
- Money market funds are low-risk, investing in short-term debt instruments, and primarily pay interest, though at lower rates than other mutual fund types.
- Mutual funds are required to distribute almost all income to shareholders, including dividends, interest, and capital gains, to avoid taxation at the fund level.
Types of Mutual Funds
There are four main categories of mutual funds, and each category suits different investing goals.
Stock funds include only investments in the stock market. If any of these stocks pay dividends, then the mutual fund also pays dividends.
Similarly, bond f
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