PSU (Public Sector Undertaking) stocks are shares of government-owned companies operating in key sectors like banking, oil & gas, power, infrastructure, and defense, contributing significantly to economic development.
A high dividend yield indicates a stock offering substantial dividend payouts relative to its price.
PSU stocks are known for their stability, strong government backing, and attractive dividend payouts. High dividend yield PSU stocks are particularly appealing to investors seeking steady income along with potential capital appreciation.
Hence, let’s examine the top 5 such stocks selected from Equitymaster’s screener for High Dividend Yield PSU Stocks.
These are not stock recommendations. Investors should do their own research and do due diligence before considering any investment in the stock market.
Also, investors should pay close attention to corporate governance while performing their due diligence.
#1 Indian Oil Corporation Ltd (IOCL)
First on this list is IOCL.
IOCL is a Maharatna company controlled by Government of India.
It has business interests straddling the entire hydrocarbon value chain – from refining, pipeline transportation and marketing of petroleum products to research and development, exploration & production, marketing of natural gas and petrochemicals.
It has the leadership position in the oil refining & petroleum marketing sector of India.
As of 10 March 2025, the company has a dividend yield of 9.9%.
The company’s revenue has grown at a compounded average growth rate (CAGR) of 7.9% in the last five years while its net profit has grown at a CAGR of 18.6%.
The company’s five-year average return on equity (RoE) and return on capital employed (RoCE) were 14.9% and 12.3%, respectively.
Its debt-to-equity ratio was 0.7 as of 31 March 2024.
The company recorded refining throughput of 18.1 MMT in Q3 FY25 with a capacity utilization of 102.3%.
Additionally, IOCL recorded the highest-ever sale of petroleum products in Q3 FY25 at 23.4 MMT, compared to 20.5 MMT in the previous quarter.
The management is optimistic about growth trajectory with anticipated increase in petroleum product demand, projected to reach 252.9 MMT in FY26.
The company has made an investment of Rs 720 billion (bn) to enhance refining capacity by 25% to 88 million metric tonne per annum (MMTPA).
The refinery expansions are expected to contribute to profitability starting FY27, with full contributions anticipated by FY28.
#2 Coal India Ltd (CIL)
Second on this list is Coal India.
Coal India is engaged in the mining and production of coal and operates coal washeries.
The company leads the country’s coal production, contributing around 80% of the nation’s coal output. Its supplies to the power sector exceed 80% of its dispatch.
As of 10 March 2025, the company has a dividend yield of 6.8%.
Coming to the financials, the company’s revenue has grown at a CAGR of 11.1% in the last five years while its net profit has grown at a CAGR of 8.5%.
The company’s five-year average RoE and RoCE were 73.7% and 74.7%, respectively.
Its debt-to-equity ratio was 0.1 as of 31 March 2024.
The company aims to achieve a coal production target of 1 BT (billion tonnes) by FY26.
Aligning with global sustainability trends, CIL plans to install 5,570 MW (megawatt) of renewable energy capacity by 2030.
The company is implementing a 3 GW (gigawatt) solar power program, with significant additional capacity planned over the next few years.
To facilitate efficient and eco-friendly coal transportation, CIL has initiated 17 new First Mile Connectivity (FMC) projects, with an estimated investment of Rs 110 bn. These projects are designed to enhance the loading capacity by 317 million tonnes per annum (MTPA).
#3 Hindustan Petroleum Corporation Ltd (HPCL)
Next on this list is Hindustan Petroleum Corporation.
HPCL is engaged in refining crude oil and marketing petroleum products, production of hydrocarbons as well as providing services for management of exploration & production blocks.
The company has been operating in India for more than 100 years.
HPCL operates the second largest cross-country product pipeline network. It is the second largest retail network holder and the second largest LPG marketer. It also operates the largest lube refinery in India.
As of 10 March 2025, the company has a dividend yield of 6.5%.
The company’s revenue has grown at a CAGR of 9.5% in the last five years while its net profit has grown at a CAGR of 19.5%.
The company’s five-year average RoE and RoCE were 15% and 9.5%, respectively.
Its debt-to-equity ratio was 1.3 as of 31 March 2024.
The company recorded its highest ever crude throughput at 18.5 million metric tons (MMT) in 9M FY25, operating at 106% of installed capacity, a 12.4% increase YoY.
The company recorded a market share gain of 0.4% in Q3 FY25, outperforming industry growth rates.
HPCL received approval for a Rs 47 bn lube modernization and bottom upgradation project at Mumbai refinery which is scheduled for completion by March 2028.
Additionally, the company is pursuing value unlocking initiatives for the lubricant business and actively seeking government approval for a business carve-out.
#4 Bharat Petroleum Corporation Ltd (BPCL)
Fourth is BPCL.
BPCL is engaged in refining crude oil and marketing petroleum products.
It has 14-15% of the country’s total refining capacity. It has a market share of around 26% in the domestic petroleum market, 27% in LPG, 21% in ATF (Aviation Turbine Fuel), and 25% in lubricants.
As of 10 March 2025, the company has a dividend yield of 6.1%.
The company’s revenue has grown at a CAGR of 8.6% in the last five years while its net profit has grown at a CAGR of 30.2%.
The company’s five-year average RoE and RoCE were 23.8% and 21.4%, respectively.
Its debt to equity ratio was as low as 0.6 as of 31 March 2024.
The company’s domestic market share grew by 4% year-on-year (YoY) to 13.4 MMT.
BPCL achieved a record breaking ethanol blending of 15.6% and commissioned two LNG stations during the latest quarter.
The Russian crude processing was down to 31% in Q3 FY25. Going forward, the management anticipates at least a 20% cut in Russian cargoes for March, with sourcing from the Middle East or WTI (West Texas Intermediate) as alternatives.
Recently, the company secured 1,200 megawatts (MW) of solar PV project with a capital investment of Rs 7.5 bn to produce 400 million (m) units of green energy.
The company is targeting 2 gigawatts (GW) of renewable capacity by FY26, with a long-term goal of 10 GW by 2030-2035.
Going forward, BPCL will be allocating Rs 100 bn over the next two years for renewable projects.
#5 Oil & Natural Gas Corporation Ltd (ONGC)
Last on this list is ONGC.
ONGC is the largest crude oil and natural gas company and the most profitable PSU in India.
It contributes around 71% to the Indian domestic production.
As of 10 March 2025, the company has a dividend yield of 5.5%.
Coming to the financials, the company’s revenue has grown at a CAGR of 3.4% in the last five years while its net profit has grown at a CAGR of 8.7%.
The company’s five-year average RoE and RoCE were 12.2% and 15.9%, respectively.
Its debt-to-equity ratio was 0.4 as of 31 March 2024.
The company has 25 major projects amounting to more than Rs 1 billion (bn), under implementation. Additionally, ONGC will be undertaking 11 development & 14 infrastructure projects with total outlay of about Rs 744.7 bn.
The decrease in statutory levies, royalty, and excise duty due to lower average sale prices of crude oil has impacted revenues.
The company’s management is optimistic about reversing the declining trend in crude oil production and improving gas production through new wells and interventions.
Gas production is expected to ramp up significantly with new projects and production from existing fields, aiming for a target of 10 million metric standard cubic meters per day (MMSCMD) by FY25-end.
Snapshot of High Dividend Yield PSU Stocks on Equitymaster’s Stock Screener
Here’s a table that shows the high dividend yield PSU stocks across various parameters.
Conclusion
High dividend yield PSU stocks are an attractive option for investors seeking steady returns and portfolio stability.
Backed by the government and operating in key sectors, these companies provide consistent dividend payouts along with long-term growth potential.
While PSU stocks often trade at lower valuations, factors such as disinvestment, policy reforms, and improving financial performance can unlock significant value.
However, investors should carefully analyze fundamentals, sector outlook, and market conditions before making investment decisions.
Additionally, conducting due diligence on these companies and including corporate governance as a key criterion in your selection process is essential.
At the same time, assess your financial goals, risk tolerance, and investment horizon before making investment decisions.
With the right selection, top PSU stocks can offer a balanced mix of income and growth, making them a valuable addition to a diversified portfolio.
Happy Investing.
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