Which are the Highest-Paying Dividend Stocks in the BSE PSU Index?

In 2024, dividend stocks have gained significant traction due to heightened market volatility, driven by factors such as subdued urban consumption, rising geopolitical tensions in the Middle East, and the ongoing Russia-Ukraine conflict.

Amid this uncertainty, dividend-paying stocks have become a sought-after choice for investors, offering consistent returns even in the face of broader market fluctuations.

Similarly, the Public Sector Undertaking (PSU) sector has garnered attention, continuing its strong performance for the fourth consecutive year.

The demand for state-owned stocks remains robust, fuelled by strong financials, policy stability, political confidence, and solid order flows.

However, while PSU stocks maintained a bullish trend in the first half of the year, concerns over potential government capital expenditure slowdowns led to a dip in the latter part of the year. Nevertheless, the strong performance in the first half ensured that the BSE PSU Index closed 2024 with over 20% gains.

Given this backdrop, high dividend-paying PSU stocks can be an attractive option. Therefore, in this article, we highlight the top dividend-paying stocks within the BSE PSU Index, ranked by their dividend yield.

#1 Indian Oil Corporation

First on our list is the Indian Oil Corporation (IOC).

Trading at Rs 132 intraday on 9 January 2025, IOC leads the list with a dividend yield of 9.1%. It is also the highest dividend paying stock of BSE 100 index.

This makes it one of the most attractive energy stocks for dividend-focused investors.

IOC's Dividend History (2020-24)

	Mar-20	Mar-21	Mar-22	Mar-23	Mar-24
Dividend per share (Adj.) (Rs)	2.8	8	8.4	2.9	11.7
Dividend payout ratio (%)	(-213.2)	51.9	46.1	35.3	38.3
Dividend Yield (%)	5.2	13.1	10.6	3.8	7.2

Source: Equitymaster

Indian Oil Corporation has declared 39 dividends since 2001.

For FY24, IOC paid out Rs 12 per share in dividends, split between Rs 5 as an interim dividend and Rs 7 as the final payout.

An interesting fact about IOC is that it uses its dividend policy strategically, balancing its commitments to shareholders with reinvestment in growth initiatives like refining capacity expansion and renewable energy projects.

The company is the largest oil marketing company (OMC) in India and boasts a market capitalisation of nearly Rs 2 trillion (tn), making it the third-largest oil and gas company in the country.

It supplies its products to over 70 countries globally and operates 11 of India's 23 refineries, with a combined refining capacity of 80.7 million tonnes per annum (MTPA).

The company is committed to driving India's green transition through various initiatives, including emission mitigation, energy efficiency, fuel replacement, and renewable energy projects.

Looking ahead, IOC aims to generate 200 GW of renewable energy by 2050, alongside producing 7 m tonnes of biofuels and 9 m tonnes of biogas.

Additionally, IOC is significantly expanding its petrochemical operations, with plans to more than triple its capacity by 2030. This includes new plants at its Gujarat and Panipat refineries, as well as increased lube oil base stock (LOBS) production capacity at its Haldia complex.

For more details, see the IOC company fact sheet and quarterly results.

#2 BPCL

First on the list is BPCL.

Trading at Rs 282 intraday on 9 January 2025, BPCL has a dividend yield of 7.6%. BPCL stands as highest-paying dividend stocks in the Nifty 50 ranked by highest dividend yield.

BPCL has been paying consistent dividends, it has declared 41 dividends since 2001.

BPCL Dividend History (2020-2024)

	Mar-20	Mar-21	Mar-22	Mar-23	Mar-24
Dividend per share (Adj.) (Rs)	7.5	38.1	7.9	1.9	15.5
Dividend payout ratio (%)	88.5	95.5	29.2	40	25
Dividend Yield (%)	5.2	18.5	4.5	1.2	5.2

*Adjusted for bonus issues and stock splits
Source: Equitymaster

In the past 12 months, BPCL has declared an equity dividend amounting to Rs 31.5 per share.

An interesting and lesser-known fact about BPCL is its ability to maintain robust dividend payouts while simultaneously investing in transformative projects.

The company has been actively channelling funds into expanding its refining capacity, enhancing fuel retail infrastructure, and exploring renewable energy ventures, all without compromising on shareholder returns.

BPCL is a Fortune 500 company that is involved in oil refining, exploration, and marketing. In 2024, it was ranked 6th in the Fortune India 500.

The company is India's second-largest oil marketing company (OMC). It's also the third-largest company in terms of refining capacity and the sixth-largest in terms of turnover. It's building petrochemical projects in Bina and Kochi, with a target to commission them by 2027 and 2028.

BPCL plans to install 4-wheeler fast chargers at approximately 6,000 retail outlets across 400 highway corridors over the next five years. Further, it aims to achieve net zero carbon emissions by 2040.

For more details, see the BPCL company fact sheet and quarterly results.

#3 Coal India

Next on the list is Coal India.

Trading at Rs 373 intraday on 9 January, the company has a dividend yield of 6.9%.

Coal India Limited (CIL) is renowned for its strong dividend-paying history, consistently rewarding shareholders with attractive payouts since its listing in 2010.

Coal India Dividend History (2020-2024)

	Mar-20	Mar-21	Mar-22	Mar-23	Mar-24
Dividend per share (Adj.) (Rs)	12	16	17	24.3	25.5
Dividend payout ratio (%)	44.3	77.6	60.3	47.1	42.1
Dividend Yield (%)	8.6	12.3	9.3	11.4	5.9

*Adjusted for bonus issues and stock splits
Source: Equitymaster

From a long-term perspective, Coal India has demonstrated a robust dividend-paying history. Over the past five years, its average dividend payout ratio has stood at an impressive 54.3%, while its average dividend yield has been a notable 9.5%.

The company has consistently upheld its dividend payout ratio within a stable range of 40-80%.

For FY25, Coal India has declared its first interim dividend of Rs 15.75 per share. The dividend was paid on 5 November 2024.

As of FY24, Coal India holds a strong cash position, with Rs 53.5 bn in cash and cash equivalents. Coal India has high free cash flows, which is why the company consistently pays high dividends.

As a government-owned entity, Coal India's dividends play a vital role in generating revenue for the Indian government, which holds a majority stake.

Coal India (CIL) is an Indian central public sector undertaking (PSU), it is mainly engaged in mining and production of coal and also operates coal washeries. It's the largest government-owned coal producer in the world.

Going ahead, Coal India plans to develop 36 new coal projects over the next five years.

For more details, see the Coal India fact sheet and quarterly results.

#4 HPCL

First on the list is HPCL.

Trading at Rs 385 on 9 January 2025, HPCL leads the BSE Midcap pack with a dividend yield of 5.4%.

HPCL's Dividend History (2020-24)

	Mar-20	Mar-21	Mar-22	Mar-23	Mar-24
Dividend per share (Adj.) (Rs)	6.9	15.5	9.3	0	21
Dividend payout ratio (%)	56.3	31	27.2	0	27.9
Dividend Yield (%)	5.1	9.7	5.2	0	6.6

Source: Equitymaster

HPCL has declared 35 dividends since 2000. The company boasts a rich history of paying dividends to its shareholders.

As per the data available on BSE, the company declared its highest dividend in 2015, amounting to Rs 24.5 per equity share.

HPCL is a PSU that refines crude oil and sells petroleum products in India and the marketing of various petroleum products.

It owns and operates two major refineries in Mumbai and Visakhapatnam. HPCL owns India's largest lube refinery in Mumbai, producing lube base oils with a capacity of 428,000 metric tonnes per annum.

The company is set to commission its LNG regasification and storage terminal at Chhara and an LPG cavern storage facility at Mangalore.

Additionally, HPCL's 2G ethanol plant in Bathinda will come online before the year ends, contributing to the company's efforts in renewable energy.

For more details, see the HPCL fact sheet and quarterly results

#5 ONGC

Next on the list is ONGC.

With ONGC's share price at Rs 262 intraday on 9 January 2025, the company has a dividend yield of 4.5%.

From a long-term perspective, ONGC boasts a solid dividend-paying track record.

ONGC Dividend History (2020-2024)

	Mar-20	Mar-21	Mar-22	Mar-23	Mar-24
Dividend per share (Adj.) (Rs)	5	3.6	10.5	11.3	12.3
Dividend payout ratio (%)	54.9	21.2	26.8	41.6	27
Dividend Yield (%)	7.3	3.5	6.4	7.5	4.6

*Adjusted for bonus issues and stock splits
Source: Equitymaster

Its five-year average dividend payout ratio stands at 34.3%.

The company has declared 59 dividends since 2000. In the past 12 months, it has declared an equity dividend of Rs 12.5 per share.

ONGC is India's largest producer of crude oil and natural gas, accounting for around 70% of the country's domestic production.

Going forward, the company is adapting its financial strategies to manage higher statutory levies and exploration costs. The goal is to mitigate their impact on profitability and improve financial performance in upcoming quarters.

ONGC is investing in technological advancements and operational efficiencies to enhance its overall production capabilities and cost management.

For more details, see the ONGC company fact sheet and quarterly results.

Conclusion

Dividend-paying PSU stocks present a compelling investment opportunity, attracting substantial investor interest in 2024.

These stocks have benefited from government initiatives like Make in India and an increase in capital expenditure, which have bolstered their prospects.

Despite rich valuations, these stocks continue to draw significant attention from investors, particularly after the formation of the BJP-led NDA government for a third consecutive term.

This development has reassured investors that capital expenditure is likely to remain strong until 2029, further supporting the growth of PSU stocks.

In addition to growth potential, dividend-paying PSU stocks offer a consistent income stream, providing a cushion during periods of market volatility. This is particularly appealing in the context of uncertain economic conditions, where the stability of dividends serves as a safety net for investors.

However, one potential downside is that the performance of these stocks may be heavily influenced by government policy decisions, which could pose a risk if there are any unexpected shifts in government spending or fiscal policy.

If you want to dig deeper, use Equitymaster's stock screener to check high dividend yield stocks and the best dividend stocks to buy.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...