Public Sector Undertaking (PSU) stocks are well known for giving regular dividends, making them a popular choice among investors looking for steady income. In recent years, many of these companies have not only provided attractive dividends but have also delivered strong returns, creating wealth for investors.
The BSE PSU Index has jumped almost 250% in the last five years, supported by better business performance, improved financials, and government reforms.
Interestingly, the dividend yield offered by many PSU companies is even higher than what you get from government schemes or bank fixed deposits (FDs). Another plus point is that most of these PSU stocks are priced below ₹400, making them affordable for retail investors.
What is Dividend Yield?
Dividend yield is the annual dividend a shareholder earns compared to the stock’s current market price.
For example: If a company’s share price is ₹100 and it pays a ₹5 dividend, the dividend yield is 5%.
A dividend yield of 5% or more is usually considered attractive. However, investors should also check the company’s financial strength before investing — because high dividends don’t always mean the company is financially strong.
Top High Dividend-Paying PSU Stocks
According to Axis Securities, most of the top dividend-paying PSUs are from the financial sector, oil & gas, and metals & mining industries.
Here are the top names:
| Company | Industry | Dividend (₹, last 12 months) | Dividend Yield |
|---|---|---|---|
| Coal India | Metals & Mining | 26.9 | 7% |
| NMDC | Metals & Mining | 4.8 | 7% |
| ONGC | Oil & Gas | 13.5 | 6% |
| NALCO | Metals & Mining | 10 | 5% |
| REC Ltd | Financials | 19.1 | 5% |
| Power Finance Corp. | Financials | 19.5 | 5% |
| GAIL (India) | Oil & Gas | 7.5 | 4% |
| Balmer Lawrie | Others | 8.5 | 4% |
| RITES | 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% |
| HUDCO | Financials | 6.9 | 3% |
| BPCL | Oil & Gas | 10 | 3% |
Key Highlights:
- Coal India & NMDC top the list with 7% dividend yield each.
- ONGC follows with a 6% yield.
- NALCO, REC, and Power Finance Corp. come next with a 5% yield.
- GAIL, Balmer Lawrie, RITES, and Canara Bank offer a 4% yield.
- Banks like Bank of India, Union Bank, and Bank of Baroda provide 3% yield.
- BPCL and HUDCO are also at 3% yield.
Why Investors Like These Stocks
- Regular income through dividends.
- Many stocks available under ₹400.
- Higher yields compared to FDs and some government schemes.
- Potential for long-term wealth creation as well.
For investors, high-dividend PSU stocks offer both steady income and growth opportunities, but it’s always wise to check the company’s financial health before investing.
