Dividend-paying stocks: Public sector undertakings (PSUs) have long been favoured for their consistent and attractive dividend payouts, offering investors a stable source of income. In recent years, many of these companies have gone beyond just being reliable dividend plays — they’ve also emerged as strong wealth creators, providing twin benefits to investors.
The BSE PSU index has surged nearly 250% in the last five years, driven by a rally in its constituents on the back of better execution, improving financials and government reforms.
The dividend payouts by these PSU stocks sometimes have a yield higher than that offered by several government schemes and bank fixed deposits (FDs).
What’s better? Most of these stocks are priced below ₹400, making them a lucrative bet for retail investors.
What is a dividend yield?
Dividend yield reflects the annual dividend income a shareholder receives as a percentage of the stock’s current market price. It’s a key metric for those investors who are focused on earning a regular income from their investment.
While a higher dividend yield may suggest greater income, it doesn’t necessarily reflect a company’s financial health or long-term stability. Typically, a dividend yield of 5% or more is considered attractive, but it should always be evaluated in the context of the company’s fundamentals.
High dividend-paying PSU stocks
According to a study by Axis Securities, most of the highest dividend-paying PSU stocks belonged to the financial sector, oil and gas and metal and mining.
Coal major Coal India and NMDC have the highest dividend yields of 7% each. In terms of total dividend, Coal India paid a dividend of ₹26.9 per share, while NMDC paid a dividend of ₹4.8 per share.
| Company Name | Industry | Dividend (Last 12 Mo, ₹) | Dividend Yield (%) |
| Coal India Limited | Metals & Mining | 26.9 | 7% |
| NMDC Ltd | Metals & Mining | 4.8 | 7% |
| Oil and Natural Gas Corporation Ltd | Oil & Gas | 13.5 | 6% |
| National Aluminium Co. Ltd. | Metals & Mining | 10 | 5% |
| REC Limited | Financials | 19.1 | 5% |
| Power Finance Corporation Ltd | Financials | 19.5 | 5% |
| GAIL (India) Ltd. | Oil & Gas | 7.5 | 4% |
| Balmer Lawrie & Co. Ltd. | Others | 8.5 | 4% |
| RITES Limited | Industrials | 10 | 4% |
| Canara Bank | Financials | 4 | 4% |
| Bank of India | Financials | 4.1 | 3% |
| Union Bank of India | Financials | 4.8 | 3% |
| Bank of Baroda | Financials | 8.4 | 3% |
| Housing & Urban Development Corporation Ltd | Financials | 6.9 | 3% |
| Bharat Petroleum Corporation Ltd | Oil & Gas | 10 | 3% |
It is followed by Oil and Natural Gas Corporation (ONGC), with a dividend yield of 6% and a dividend payout of ₹13.5 in the last 12 months.
NALCO, REC Limited and Power Finance Corporation are next on the list of highest dividend-paying PSU stocks, with a dividend yield of 5% each. These companies paid a dividend of ₹10, ₹19.1 and ₹19.5, respectively.
Gail (India), Balmer Lawrie & Co. and RITES offer a dividend yield of 4% each.
They are trailed by several PSU bank stocks, including Canara Bank, Bank of India, Union Bank of India, and Bank of Baroda (BoB). These stocks offered dividends between ₹4 to ₹8.4, with a dividend yield of 4% for Canara Bank and 3% for the rest of the bank stocks.
Lastly on the list are BPCL and HUDCO. Oil PSU BPCL delivered a dividend of ₹10, with a yield of 3%. Meanwhile, HUDCO gave a dividend of ₹8.4, also a yield of 3%.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
