Paying Dividend Not Mandatory

I am a senior citizens, invested two years back in the Reliance Equity Hybrid Fund on quarterly dividend payout basis with the intention to have a regular income, but this time we have not received our quarterly dividend due on Dec 20, 2018. On contacting the fund's office here, we came to know that the dividend due on Dec 20, 2018, was not declared due to a shortage of surplus funds. We have been regularly receiving our dividend payments from investment in other funds without any interruptions. Now, we seek your advice as to what should we do to get the needful done.

- Rajendra Singh 

Editor Responds: 

Going through the fund's Scheme Information Document, we find that they have categorically mentioned, “The Mutual Fund is also not assuring that it will make periodical dividend distributions, though it has every intention of doing so.” So technically, they are not bound to pay dividends. Being a research house we believe that their decision to withhold dividend will not work against you in the long run. First of all, dividends are paid by the mutual funds from your pocket by booking some profits in your scheme and distributing it to you. We believe as the fund is performing well, you will be compensated through future dividend payouts. In case you have liquidity issue you can sell part of the units to meet your liquidity issues, this might also work out to be more tax-efficient. Hope this helps.