MF Dividend and Stock Dividend

When i mean MF , i would be referring to Equity mutual funds ( Those with greater then 65% invested in equity .Would start off with

Similarities
a.The Investor gets cash in hand
b.The Dividend is tax free in the hands of the investor
c.Investor may not get dividends each year
d.Dividend always a percentage of the face value

Differences
a.The stock price may or may not be affected after a dividend , But NAV of a Mutual Fund invariably reduces by an amount equal to the dividend
b.Dividend stripping law , would be applicable to the MF units, once the dividend has been received
c.When a company declares dividend it would be from its profits or may be reserves ,but a MF would have to sell its underlying assets to pay the dividend .

The final point in "Differences" is what makes all the difference . That is , in case of MF it is AMC just selling off something that already belonged to you and giving you the money and then making it look like they have been phenomenally generous.

The only occasion where a dividend from MF may make sense ,not from being invested in equity for long term ,but purely from money in hand sense would be dividends declared by ELSS , as you claim tax deduction for money invested and dividends here mean you are indirectly claiming higher percentage of tax deduction
Image : FreeDigitalPhotos.net,Photographer: renjith krishnan