As we venture into FY26, a notable trend is emerging among seasoned investors: the increasing allure of dividends. This isn’t about the mundane payouts often overshadowed by annual reports; rather, it’s about dividends that can make you sit up and pay attention. With interest rates remaining elevated and the market navigating uncertainty, dividend-paying stocks are evolving into strategic assets, offering stability, reliable income, and, in some cases, surprising growth potential.

The Rising Importance of Dividends

In today’s market, dividends are crucial. When capital gains become unpredictable, a steady stream of payouts can provide a cushion. For investors, dividends are no longer an afterthought; they play a pivotal role in investment strategies. Among the most appealing options are Public Sector Undertakings (PSUs), known for their robust dividend policies and consistent performance.

• PSUs have a rich history of rewarding shareholders with dividends, thanks to their strong cash flows and government backing.
• These companies often lead their industries and maintain stable business models, making them attractive for income-focused investors.

With the promising landscape of FY26, let’s explore three PSU stocks that not only boast a consistent dividend history but have also reported increased profits this year.

1. MSTC: A Dividend Powerhouse

MSTC (Metal Scrap Trade Corporation) engages in trading and e-commerce, focusing on ferrous and non-ferrous scrap, among other products. As a government-owned entity, MSTC has earned a reputation for generous shareholder dividends.

• In FY24, MSTC hit a record by distributing ₹15.5 per share, comprising two interim dividends and a final payout. Remarkably, even when profits dipped from ₹239.3 crore to ₹171.4 crore, MSTC raised its dividend from ₹14 to ₹15.5, showcasing its commitment to shareholder returns.

Looking ahead, MSTC is poised for significant profit growth due to several factors:

• The sale of its subsidiary FSNL brought in an exceptional ₹273.5 crore in Q3 FY25.
• New contracts with Coal India and various states, along with partnerships with Bharat Petroleum, are expected to boost revenue.

With a commitment to consistent dividends, MSTC could make waves in FY26 with another record payout.

2. National Aluminium Company (NALCO): A Steady Performer

Founded in 1981, National Aluminium Company (NALCO) is a Navaratna enterprise that produces alumina and aluminum. It stands out among PSUs for its ability to combine commodity performance with reliable dividends.

• Over the past five years, NALCO’s profitability surged from ₹138 crore in FY20 to over ₹2,000 crore in FY24.
• The dividend per share more than doubled during this time, rising from ₹2.7 in FY20 to ₹5 in FY24.

Recent results have shown NALCO’s best quarterly performance to date, with a 224% increase in PAT for Q3 FY25. This uptick is attributed to better sales realization and efficient operations.

• With ₹8 per share in dividends already distributed in FY25, expectations of a special dividend remain high as profits continue to soar.

NALCO’s focus on growth and lack of debt positions it well to reward shareholders in the coming year.

3. Balmer Lawrie: A Steady Dividend Source

Balmer Lawrie & Company operates in diverse sectors including industrial packaging and logistics. Established in 1972, it remains under the Ministry of Petroleum and Natural Gas’s control.

• Although Balmer Lawrie has experienced fluctuations in profits, it has maintained steady dividends. The payout has risen from ₹6 in FY21 to ₹8.5 in FY24.

The company has plans for future expansion, including a ₹700 crore investment into ethanol manufacturing and logistics, aimed at capitalizing on growing market demands.

• Upcoming board meetings to discuss potential share buybacks or stock splits signal a commitment to enhancing shareholder value.

With consistent profits, no debt, and a strong dividend history, Balmer Lawrie could be gearing up for an exciting FY26.

Conclusion: The Dividend Landscape Ahead

Dividends can provide a sense of security in volatile markets, offering predictable returns where stock prices may falter. For many investors, they symbolize both reward and reassurance, especially when backed by solid fundamentals.

• Key considerations for investors include business strength, future earnings visibility, and overall industry outlook.
• While enticing dividends are appealing, long-term value ultimately arises from consistent performance.

As FY26 unfolds, the spotlight may shine brightly on companies that successfully balance generous dividends with steady growth. Keep an eye on these PSU stocks as they navigate the evolving market landscape.

For a deeper exploration into the potential of PSU stocks and their dividend offerings, consider consulting your financial advisor to align investments with your goals.