Difference Between Growth And Dividend Option

Difference Between Growth Option And Dividend Option

Major dissimilarities or difference between growth and dividend option can be highlighted as follows:

1. Introduction

Growth Option: It is an option of reinvesting the profit back in the mutual fund scheme with the aim of generating wealth in the future.

Dividend Option: It is an option of distributing profit as a dividend to the investors periodically.

2. Refers To

Growth Option: It refers to reinvestment of fund

Dividend Option: It refers to distribution of fund

3. Creation Of Value

Growth Option: It creates value because it reinvests the profit

Dividend Option: It does not create value because it does not reinvest profit.

4. Compound Return

Growth Option: It enjoys compound return on investment

Dividend Option: No compound return can be earned

5. Suitable For

Growth Option: It is suitable for long-term wealth creation

Dividend Option: It is suitable for regular income

6. Intermediate Payment

Growth Option: No

Dividend Option: Yes

7. Capital Appreciation

Growth Option: It assists capital appreciation

Dividend Option: It does not help capital appreciation

8. Possibility Of Wealth Generation

Growth Option: High chance of wealth generation in the long run

Dividend Option: Less chance

9. Consistent Cash flow

Growth Option: There will be no consistent cash flow

Dividend Option: Yes, it ensures consistent cash flow

10. Effect On Net Asset Value

Growth Option: It increases the net asset value

Dividend Option: It lowers the net asset value

Growth Option Vs Dividend Option (Comparison Chart)

Basis	Growth Option	Dividend Option
Introduction	Reinvestment of profit back in the business	Distribution of profit as dividend
Refers To	Reinvesting fund	Distributing fund
Value Creation	Yes	No
Compound Return	Yes	No
Suitable For	Future wealth generation	Regular income
Intermediate Payment	No	Yes
Capital Appreciation	Helpful	Not helpful
Wealth generation	Yes	No
Consistent cash flow	No	Yes
Effect On Net Asset	Increases the value	Lowers the value

I hope this post is helpful to understand the difference between growth option and dividend option and to make comparison between them.