As FY26 gets underway, one trend is quietly gaining favor with experienced investors: dividends.
Not the stodgy, snooze-inducing type that gets lost in the pages of annual reports, but the type that will make you wake up and double-check your pay-out calendar. As interest rates remain high and markets fight to find their bearings, dividend-paying shares are no longer for risk-averse investors alone. They are becoming a tactical shield — providing solidity, steady income, and in some instances, unexpected upside.
During such times, dividends are more important than ever. When capital gains are uncertain, a consistent payout can help. For most investors, dividends are not an afterthought — they’re an integral part of the strategy. And when the search is for high dividend payers, public sector undertakings cannot be ignored.
PSUs have been famous for their rich dividend policies for a long time. Supported by robust cash flows, stable earnings, and government thrust for shareholder returns, they tend to turn into safe dividend bets. Most of them are leaders in their respective industries. Most of them have limited capex requirements and stable business models — making it convenient to distribute profits to investors.
That is why PSU shares with increasing profits and a stable dividend track record warrant a second look in FY26. Here are three companies from the list of PSU shares that fit the description. They have all reported higher profits this year. They have a consistent track record of lavish dividends, market capitalization greater than Rs 500 crore, and a solid dividend yield— all of which make them robust candidates for the possibility of dividend upgrade this year.
MSTC (Metal Scrap Trade Corporation) undertakes trading activities, e-commerce and also disposal of ferrous and non-ferrous scrap, surplus stores, minerals, agri and forest products, etc. The company is owned and controlled by the Government of India.
MSTC has earned a reputation for rewarding shareholders with regular and bountiful dividends. In FY24, it distributed a total dividend of Rs 15.5 per share — its all-time high payout. This consists of two interim dividends and a final dividend, following the trend over the last few years. The company has not missed a dividend in the past seven years, showing a strong focus on shareholder returns.
What is more notable is that its dividend has still gone up even when profits fell. During FY24, even as profit after tax fell from Rs 239.3 crore to Rs 171.4 crore, the dividend per share increased from Rs 14 to Rs 15.5. This indicates MSTC’s faith in its cash balances and consistent operations. It also confirms the company’s determination to keep investor payouts top — even in relatively weaker years.
MSTC‘s bottom line may witness a big leap in the next quarters due to a combination of one-time benefits and growing business pipelines. Sale of its subsidiary FSNL has already generated a windfall, recording an exceptional income of Rs 273.5 crore in Q3 FY25. This took 9-month profit after tax (PAT) to Rs 335.9 crore — over double last year’s amount.
But the actual clincher is on the business front. The company has recaptured the Coal India auction contract, acquired new mineral auction contracts with multiple states, commissioned a real estate auction portal, and won new mandates from Bharat Petroleum and the Ministry of I&B. With these top lines kicking in, MSTC‘s operating profits will likely come roaring back.
If profits do increase as hoped, the company can continue its dividend run with another record payout in FY26. For FY25 it has already announced Rs 40.5 per share in interim dividends— and that’s without the final dividend announcement yet. What makes it more attractive is MSTC‘s openness to distributing profits even in lean years.
With cash flows supported by both one-time income and recurring contracts, the company is positioned to continue its generous dividend policy. For income-seeking investors, this could be one of the most rewarding PSU stories to watch.
Incorporated in 1981, National Aluminium Company (NALCO) manufactures and sells Alumina and Aluminium.
The company is a Navaratna Central Public Sector Enterprise under the Ministry of Mines. It is one of the largest integrated Bauxite-Alumina-Aluminium-Power Complex in India and one of the largest integrated primary producers of aluminum in Asia.
Among PSU shares, NALCO is unique to combine commodity performance with steady payouts to shareholders. Its profitability, in the last five years, has improved comprehensively — up from mere Rs 138 crore in FY20 to over Rs 2,000 crore in FY24.
While aluminium prices and margins have had their cycles, the company has been able to maintain earnings resilience. That performance has set the stage for a consistent and growing stream of dividends.
The per-share dividend has increased over two-fold during this period — from Rs 2.7 in FY20 to Rs 5 in FY24, with a high of Rs 6.5 in FY22. In FY24 alone, NALCO distributed Rs 734.6 crore as dividends, equivalent to 35.7% of its PAT. The company’s success in sustaining significant payouts in both high and moderate earnings cycles is an indication of long-term dividend visibility.
NALCO reported its best-ever quarterly and nine-month PAT, turnover, and EBITDA in Q3 FY25. PAT in the quarter increased 224% YoY to Rs 1,583 crore, while nine-month PAT increased 211% to Rs 3,246 crore.
Sharp uptick in the profit was helped by improved realization of sales across alumina as well as aluminum segments, volumes of alumina, and a reduction in the cost of raw materials with captive coal usage. The management averred that with these robust figures, they remain confident that strategic implementation and efficiencies are behind them, and as such, they could carry into the last quarter of FY25.
With this kind of performance and the absence of any debt, NALCO seems poised to treat shareholders royally. Management is of the view that volume and margin growth is still a focus. NALCO has already distributed Rs 8 per share in dividends till date in FY25. With profit soaring and realisations of alumina remaining strong, a special dividend in the latest results is on the cards — and FY26 may spell another year of blockbuster dividend payments.
Balmer Lawrie & Company is engaged in the business of industrial packaging, greases & lubricants, leather chemicals, logistic services and infrastructure, refinery & oil field and travel & vacation services in India.
It is a central public-sector undertaking under the administrative control of Ministry of Petroleum and Natural Gas, since 1972.
Balmer Lawrie might not have reported unbroken profit growth annually, but it has continued to be profitability steady over the five years. PAT fluctuated between Rs 113.4 crore in FY21 and Rs 203.5 crore in FY24, indicating stability even during difficult times such as the pandemic. Although there have been fluctuations, core businesses of the company have always been cash-generative. Such consistent profitability has enabled it to maintain regular dividend payments without fail.
Actually, its per-share dividend has increased steadily from Rs 6 in FY21 to Rs 8.5 in FY24. Even during years when profit levels declined, the company held — and sometimes even increased — its dividend, indicating robust reserve and cash flow confidence. Balmer Lawrie’s capacity to sustain shareholder rewards through business cycles makes it a sound choice for dividend-oriented investors.
Balmer Lawrie is setting the stage for future expansion with a Rs 700 crore capex announced in September 2024. The investment is aimed at venturing into ethanol manufacturing and growing its logistics and packaging verticals — industries with robust policy support and increasing demand.
Although the payoff will be realized in the longer term, the strategy marks a move towards more-margin-high, future-proofed businesses. If things go according to schedule, such endeavors could start impacting the firm’s profitability from FY26.
Adding to the encouragement is the coming board meeting to discuss a share buyback, stock split, or bonus issue — an internal confidence indicator of shareholder value obsession. With unchanging profits, no debt at all, and new top line opportunities opening up, FY26 may signal the start of an improved earnings cycle. And in case the bottom line grows modestly too, a larger dividend is on the cards.
Balmer Lawrie already demonstrated that it does not wait for record profits to treat investors fairly — now it might at last have both.
Conclusion
Dividends can be a source of comfort during trying times. They introduce predictability where price action does not. To many investors, they are reward and comfort — particularly when supported by sound fundamentals and a history of consistency. Dividend payments are, however, something to keep an eye on, though they represent merely one aspect of the investing equation.
A comprehensive perspective is significant. Any investment should be considered after more than the dividend yield. Strength of business, visibility of future earnings, industry outlook, capital discipline, and management intent — all are involved.
A large payout is appealing, but long-term value comes from consistent performance. FY26 might have enticing dividends, but the true opportunity is viewing the complete picture.
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Ekta Sonecha Desai has a passion for writing and a deep interest in the equity markets. Combined with an analytical approach, she likes to deep deep into the world of companies, studying their performance, and uncovering insights that bring value to her readers.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
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