Dividend income has become a source of reliability for many investors in an erratic market landscape with varying returns and growing volatility. In India, Public Sector Undertakings (PSUs) are famous for their consistent dividend payouts and hence are preferred by investors who prefer regular income.
This article analyses the top five PSU stocks with the highest dividend yield.
Coal India Ltd
Coal India Ltd [NSE: COALINDIA] continues to reign supreme among high-dividend PSU stocks with an impressive dividend yield of approximately 7%. The state-owned mining giant distributed ₹26.35 per share to its shareholders over the past year, cementing its position as a dividend powerhouse.
Despite this generous payout, the PSU’s stock performance has seen some pressure recently. As of April 16, 2025, the share price stood at ₹399.25, reflecting a decline of about 18% on a year-to-date basis. The stock has retreated significantly from its 52-week high of ₹543.55 (August 26, 2024).
What makes the Coal India dividend yield particularly interesting for income-focused investors is its government backing and established position in India’s energy infrastructure.
Oil and Natural Gas Corporation Ltd
Oil and Natural Gas Corporation [NSE: ONGC] secures the second position with a dividend yield of approximately 6%. The oil major paid a dividend of ₹13.5 per share over the last 12 months, reinforcing its reputation as one of the top dividend paying PSU stocks.
ONGC shares closed at ₹241.22 as of April 16, 2025, having declined about 10% in the preceding week. The stock has faced challenges on a longer timeframe, with a six-month decline of nearly 23% and a one-year drop of around 18%.
Despite these market challenges, ONGC dividend 2025 stands strong in terms of cash reserves, given the constant government support it receives. Its strategic role in India’s energy security framework increases its attractiveness for dividend-seeking portfolios.
Bharat Petroleum Corporation Ltd
Bharat Petroleum Corporation Ltd [NSE: BPCL] rounds out the top three with a dividend yield of approximately 6%. The downstream oil company rewarded its shareholders with ₹15.5 per share in dividends during the past year.
As of April 16, 2025, BPCL shares were trading at ₹298.75. The oil marketing company has demonstrated resilience amid global oil price fluctuations, leveraging its strong market position in India’s growing fuel retail landscape. But, this is still a considerable distance from its 52-week high of ₹376 (September 30, 2024).
BPCL dividend payout pattern has been attractive for income investors, particularly given the company’s strategic importance in India’s energy distribution infrastructure. With the oil and gas sector undergoing several reforms, BPCL continues to adapt its business model while maintaining shareholder returns.
REC Ltd
REC Ltd [NSE: RECLTD], a key financial institution focusing on power sector financing, has offered a dividend yield of roughly 5% in the last year. The company distributed ₹20.4 per share to its shareholders, making it a notable contender among high-dividend PSU stocks.
REC shares have experienced some volatility, trading at ₹424.80 as of April 16, 2025. This represents a considerable distance from its 52-week high of ₹654 on July 12, 2024. The stock has seen a steep correction of over 28% in the past six months.
Despite these market fluctuations, REC’s fundamental business of financing India’s growing power infrastructure positions it well for sustainable dividend distributions. The company’s strategic importance in facilitating India’s energy transition offers potential long-term stability.
Indian Oil Corporation Ltd
Indian Oil Corporation [NSE: IOC] completes this list of best dividend stocks in India 2025 with a substantial dividend yield of 5%. This PSU has paid ₹7 to its shareholders as dividend payouts during the last 12 months.
As of April 16, 2025, IOC’s shares were trading at ₹133.83, significantly lower than its 52-week high of ₹185.97 on July 30, 2024. For investors focused on dividend income, the company’s government backing and essential role in India’s economy enhance its appeal.
As India’s largest oil marketing company, IOC benefits from its extensive distribution network and refining capacity. The company’s position in India’s energy security framework provides a stable foundation for its dividend policy.
Why do PSU Dividend Stocks Remain Attractive?
PSU stocks with the highest dividend yield offer unique advantages beyond percentages:
- Government backing provides stronger dividend stability than many private sector alternatives during economic uncertainties.
- These high dividend PSU stocks typically maintain consistent payouts even when market conditions turn challenging.
- As a strategically important part of the Indian economy, these companies are better placed to ensure steady dividend income for investors.
- Best dividend stocks in India 2025 combine reasonable yields with institutional stability, making them suitable for income-focused portfolios.
Final Thoughts
Coal India, ONGC, BPCL, REC Ltd, and IOC stand out as the leading PSU stocks with the highest dividend yield in the current market. These government-backed enterprises are still very particular about the ongoing dividends to shareholders and are, therefore, considered better inclusions for your income-based investment portfolios.
Past dividend payouts are not necessarily a predictor of future returns, but the role these companies play in shaping India’s economic framework gives plenty of confidence in their ability to sustain dividends.
For more insights on building a balanced investment portfolio and exploring opportunities in the Indian financial markets, connect with Torus Digital.
