‘The dividend is a signal that the company is confident in its ability to generate cash and wants to share that with its shareholders.’
– Warren Buffett
In the world of investing, dividend-paying stocks are often seen as a reliable source of income, especially for those seeking stability and steady returns.
Public Sector Undertakings (PSUs) in India have long been considered attractive options for dividend investors due to their strong government backing and consistent performance.
As we look back at FY25, several PSU stocks stand out for their high dividend payments, making them a compelling choice for income-focused investors.
Considering this, we applied for a screener to identify the PSU stocks which paid the highest dividend in FY25, and which show promising prospects for the future.
So, let’s look at the four highest dividend paying PSU stocks, and the outlook for these stocks going forward.
#1 Coal India Ltd (CIL)
First on this list is Coal India.
Coal India is engaged in the mining and production of coal and operates coal washeries.
It contributes over 80% of India’s total coal production, supplying coal to power plants, steel industries, and other sectors.
The company was the highest dividend paying PSU in FY25, having distributed Rs 102.5 billion (bn).
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 return on equity (RoE) and return on capital employed (RoCE) were 73.7% and 74.7%, respectively.
Its debt-to-equity ratio was 0.1 as of 31 March 2024.
CIL plans to develop 36 new coal mining projects over the next five years to increase its production capacity and meet the nation’s growing energy demands.
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Going forward, the company is setting up 3,000 megawatts (MW) of solar power capacity by 2027-28, with further plans to add another 2,000 MW.
Additionally, CIL plans to invest about Rs 670 billion (bn) in constructing coal-fired power plants near its coal mines, primarily in Odisha. Approvals have been secured for 4.7 gigawatts (GW) of generation capacity over the next six to seven years,
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