Mutual funds pay dividends at different schedules depending on the fund and its objective.
More Info: As a general example of when different funds pay dividends the company America Funds cites their growth funds as paying dividends annually, growth income funds paying quarterly, and bond funds paying monthly.
What Is A Dividend Paying Mutual Fund?
One of the things that you can invest in that pays out even better than a traditional mutual fund is one that pays a dividend. A dividend is simply a payment that investors in a particular company get for having loyalty to that company. In this case, you are being paid a little extra money for keeping your money with a particular mutual fund. If you decide, you are able to have those dividends put back into the fund for you automatically in order to continue to grow the pile of money you have growing.
What about Extras?
There are some cases where a mutual fund will actually pay out extra on top of its usual dividend. This is only if one of the companies held within the mutual fund has what is called a capital gains payment. This is just a situation where a company made more money than they thought they would and decide to pay some of it back to investors. Sometimes this is also called a special dividend. Look for either one of these terms when you are seeing why you are getting a larger payment that you had expected. It is not common to get these special dividends, but it does happen every now and then.
“When are dividends paid by your funds.” American Funds. N.p., n.d. Web. 7 Dec. 2010. https://www.americanfunds.com/help/dividends.htm.
Franklin, Mary Beth, and Kiplinger’s Personal Finance. “Tax Tip No. 3: Avoid Mutual Fund Dividends.” Kiplinger – Personal Finance, Business, Investing, Retirement, and Financial Advice. N.p., n.d. Web. 8 Dec. 2010. http://www.kiplinger.com/columns/taxtips/archive/2007/tax1204.html.