Dividend Funds

The goal of Dividend Fund: is tax-advantaged income and the possibility of capital appreciation. These funds invest in preferred shares and high quality common shares that consistently pay dividends. Canadian investors qualify for the dividend tax credit on Canadian funds if the funds are held in non-registered portfolios.

Dividend mutual funds will primarily invest in stocks that pay dividends in most cases.† Dividends are profits that corporations share and distribute with equity stock holders.† In many cases, dividend funds will also hold common shares which do not pay dividends.† These common shares are invested in as a result of an attempt to increase returns in a mutual fund.†

Dividend Funds not only have the possibility of capital appreciation, but provide investors with tax advantaged income in the form of dividend distributions, if held in non-registered accounts.† Canadian investors in dividend funds can qualify for the dividend tax credit on investments made in Canadian dollars in most cases.† Dividend mutual funds are typically less risky than other types of Canadian, US or International equity funds or speciality funds.†

Dividend Funds from mutual fund company to mutual fund company can differ greatly.† When comparing dividend funds, ensure you look at the investment objectives and allocation of the fund.† Some funds will hold a higher amount of common shares in comparison to preferred shares.† In addition, some funds known as Dividend Income Funds may hold a larger portion in bonds.†

Mutual funds in Canada are highly regulated, and performance data is easy to acquire. Mutual funds are issued by prospectus and it is important to note that returns are not guaranteed and principal is not guaranteed.† Unit values fluctuate in value and investors may pay commissions to buy and/or redeem and sell mutual funds.† Investors should always read the prospectus prior to making an investment into a mutual fund.

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