Investing in Public Sector Undertaking (PSU) stocks offers a unique opportunity for individuals looking to benefit from government-backed enterprises in critical industries such as banking, oil and gas, power, infrastructure, and defense. These companies not only contribute significantly to the nation’s economy but also provide investors with attractive dividend yields, making them a favored option for those seeking both steady income and capital growth.

In this article, we will explore five high dividend yield PSU stocks that are standing out in the investment landscape, based on the latest data from Equitymaster’s stock screener. Remember, while we present these insights, it’s crucial for investors to conduct thorough research and due diligence before making any investment decisions.

The Appeal of High Dividend Yield PSU Stocks

High dividend yield PSU stocks are known for their consistent returns and strong government support. Here’s why investors gravitate towards them:

• Stability: These companies typically experience less volatility due to their government affiliation.
• Attractive Payouts: High dividend yields provide a steady income stream, making them appealing for income-focused investors.
• Growth Potential: Many of these firms are positioned for long-term growth in key sectors.

Top Five High Dividend Yield PSU Stocks

1. Indian Oil Corporation Ltd (IOCL)

Indian Oil Corporation is a Maharatna enterprise under the Government of India, significantly involved in the oil and gas sector.

• Dividend Yield: 9.9% as of March 10, 2025.
• Revenue Growth: The company has seen a 7.9% CAGR in revenue and an impressive 18.6% CAGR in net profit over the past five years.
• Capacity Utilization: Recorded a refining throughput of 18.1 MMT in Q3 FY25, with a remarkable capacity utilization rate of 102.3%.

IOCL plans to invest Rs 720 billion to boost its refining capacity, expecting to meet a rising demand for petroleum products projected at 252.9 MMT by FY26.

2. Coal India Ltd (CIL)

Coal India remains the largest coal producer in India, responsible for 80% of the nation’s coal output.

• Dividend Yield: 6.8% as of March 10, 2025.
• Financial Growth: With an 11.1% CAGR in revenue and an 8.5% CAGR in net profits over the last five years, CIL maintains robust profitability.
• Sustainability Goals: The company is set to install 5,570 MW of renewable energy capacity by 2030, aligning with global sustainability trends.

CIL is also investing Rs 110 billion in new First Mile Connectivity projects to enhance coal transportation efficiency.

3. Hindustan Petroleum Corporation Ltd (HPCL)

With over a century of experience, Hindustan Petroleum excels in refining and marketing petroleum products.

• Dividend Yield: 6.5% as of March 10, 2025.
• Growth Metrics: The firm boasts a 9.5% CAGR in revenue and a 19.5% CAGR in net profits over five years.
• Infrastructure Expansion: HPCL is pursuing a Rs 47 billion modernization project at its Mumbai refinery, scheduled for completion by March 2028.

The company is also actively enhancing its lubricant business and exploring new growth avenues.

4. Bharat Petroleum Corporation Ltd (BPCL)

Bharat Petroleum plays a critical role in the Indian refining landscape, holding a significant portion of the country’s total refining capacity.

• Dividend Yield: 6.1% as of March 10, 2025.
• Financial Performance: With an 8.6% CAGR in revenue and an impressive 30.2% CAGR in net profits, BPCL demonstrates strong financial health.
• Renewable Initiatives: The company has secured 1,200 MW of solar PV projects, aiming for a total renewable capacity of 2 GW by FY26.

BPCL continues to optimize its operations while maintaining a focus on sustainability.

5. Oil & Natural Gas Corporation Ltd (ONGC)

ONGC stands as India’s largest crude oil and natural gas producer, contributing 71% to domestic production.

• Dividend Yield: 5.5% as of March 10, 2025.
• Financial Insights: The company has experienced a 3.4% CAGR in revenue with an 8.7% CAGR in net profits over five years.
• Project Developments: ONGC is implementing 25 projects with a total investment exceeding Rs 1 billion.

The company is optimistic about enhancing its crude oil and gas production through new initiatives.

Conclusion

Investing in high dividend yield PSU stocks can be a strategic choice for those looking to balance income and growth potential. These stocks, backed by government support and operating in vital sectors, offer reliable dividend payouts along with opportunities for long-term appreciation.

Before diving into investments, it’s essential to analyze individual stock fundamentals, sector dynamics, and overall market conditions. Additionally, investors should prioritize corporate governance in their evaluation processes to ensure they are making informed decisions.

By carefully selecting from these top-tier PSU stocks, investors can enhance their portfolios with a mix of income and growth potential, paving the way for a more secure financial future. Happy investing!