PSU Stocks With Highest Dividend Yield in 2026: Coal India, ONGC and Power Grid Compared

Coal India CMP Rs 428.50, yield near 6.15%. ONGC CMP near Rs 243, yield 5.00%. Power Grid CMP Rs 282.90, yield 4.75%.

Coal India, ONGC and Power Grid are the three PSU stocks with highest dividend yield among large-cap government companies right now, each paying out a meaningful share of profits to shareholders every year. All three combine strong free cash flow with government pressure for higher payouts, which keeps their yields well above bank fixed deposit rates.

Government-owned companies have historically been more generous with dividends than private peers because the exchequer relies on this income. For investors screening PSU stocks with highest dividend yield, understanding payout ratios, cash flow stability and commodity price sensitivity is just as important as the headline yield number.

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This article breaks down why Coal India, ONGC and Power Grid consistently rank among PSU stocks with highest dividend yield, along with the risks that can affect future payouts.

What Makes a Stock One of the PSU Stocks With Highest Dividend Yield

PSU stocks with highest dividend yield are government-owned companies that consistently pay out 40 percent or more of net profit as dividends, supported by low capital intensity or regulated, stable cash flows. Dividend yield is calculated as annual dividend per share divided by current market price, multiplied by 100.

The government’s stake in these companies means dividend policy is influenced by fiscal needs as much as corporate strategy, which is why PSU stocks with highest dividend yield often announce multiple interim dividends through the year rather than a single annual payout.

Why Coal India, ONGC and Power Grid Lead PSU Stocks With Highest Dividend Yield

Three structural factors explain why these names dominate PSU stocks with highest dividend yield lists. Coal India generates free cash flow above Rs 25,000 crore annually with minimal capex needs relative to revenue. ONGC benefits from crude price cycles and a low reinvestment ratio in mature fields. Power Grid earns regulated returns on transmission assets, which supports predictable payouts even during its capex expansion phase.

• Low capital intensity: Coal mining and mature oil fields need less reinvestment per rupee of revenue than growth-stage businesses, freeing up cash for dividends.
• Government fiscal needs: The exchequer depends on PSU dividend income, which creates policy pressure for higher payout ratios.
• Regulated return model: Power Grid earns a fixed return on approved transmission assets, insulating dividends from demand cycles.
• Commodity price cycles: ONGC and Coal India dividends can swing with crude oil and coal price realisations year to year.

Coal India: The Highest-Yielding Large-Cap Among PSU Stocks With Highest Dividend Yield

Coal India tops most lists of PSU stocks with highest dividend yield, with a trailing yield near 6.15 percent and a payout ratio around 47 percent. The company supplies roughly 80 percent of India’s coal needs, generates free cash flow above Rs 25,000 crore a year, and remains largely debt-free.

Q4 FY26 net profit rose nearly 13 percent year on year to Rs 10,839 crore on revenue of Rs 46,490 crore. A February 2026 interim dividend of Rs 5.50 per share added to earlier payouts, taking cumulative FY26 dividends past Rs 26 per share in some tracker estimates.

ONGC: Crude-Linked Yield Among PSU Stocks With Highest Dividend Yield

ONGC is India’s largest crude oil and gas explorer, contributing around 70 percent of domestic crude output. Among PSU stocks with highest dividend yield, ONGC stands out for its scale and consistent payout ratio near 38 percent, though its dividend is more sensitive to global crude prices than Coal India’s.

The company is investing in deepwater KG Basin exploration and green hydrogen alongside its core upstream business. A market cap above Rs 3 lakh crore and return on equity near 12.7 percent make ONGC a large, liquid pick for income-focused portfolios.

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Power Grid: Regulated-Return Dividend Stability

Power Grid Corporation earns fixed, regulated returns on its transmission network, which makes its dividend one of the steadier entries among PSU stocks with highest dividend yield even as the company executes an Rs 82,000 crore capex plan through FY28.

A dividend yield near 4.75 percent, combined with capex-driven earnings growth, gives Power Grid a rare income-plus-growth profile. The stock’s regulated asset base reduces the earnings volatility that affects commodity-linked PSU dividend payers.

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Factors Affecting PSU Stocks With Highest Dividend Yield

• Payout ratio policy: Government directives on minimum dividend payouts directly influence which PSU stocks with highest dividend yield stay at the top of the list.
• Commodity price cycles: Crude oil and coal price swings affect ONGC and Coal India’s profit base and therefore their dividend capacity.
• Capex requirements: Companies undertaking large capex, like Power Grid, balance dividend payouts against reinvestment needs.
• Disinvestment activity: Government stake sales via OFS can temporarily pressure share prices, mechanically lifting dividend yield.
• Interest rate environment: Rising rates make dividend yields from PSU stocks more attractive relative to fixed income alternatives.

Benefits of Investing in PSU Stocks With Highest Dividend Yield

• Regular income: Multiple interim dividends through the year create a steady income stream comparable to or better than fixed deposits.
• Government backing: State ownership reduces the risk of a sudden dividend suspension seen occasionally in private companies.
• Valuation cushion: High dividend yield stocks tend to have lower downside volatility since income supports the valuation floor.
• Inflation hedge: Dividend growth over time, especially from commodity-linked PSUs, can help offset inflation better than fixed income.
• Portfolio diversification: Exposure spans mining, energy exploration and power transmission through a single thematic basket.

Risks of Investing in PSU Stocks With Highest Dividend Yield

• Commodity price risk: A sharp fall in crude or coal prices can reduce profits and future dividend payouts for ONGC and Coal India.
• Policy dependence: Dividend payout ratios are partly set by government fiscal priorities, which can change with each Budget.
• Capex trade-off: Higher capex commitments, as seen at Power Grid, can slow near-term dividend growth.
• Currency and global demand: Global energy demand and rupee movements affect realisations for ONGC and coal-linked companies.
• Disinvestment overhang: Periodic OFS by the government can create short-term supply pressure on these stocks.

How to Choose PSU Stocks With Highest Dividend Yield

1. Check the payout ratio, ideally in the 35 to 55 percent range for sustainability.
2. Compare dividend yield against 3 to 5 year average yield to spot artificially inflated numbers from price crashes.
3. Review free cash flow generation relative to capex commitments.
4. Track government disinvestment calendar for potential OFS-driven price dips that raise yield.
5. Prefer companies with debt to equity below 0.5 for dividend sustainability.

How to Invest in PSU Stocks With Highest Dividend Yield

1. Use the Univest platform to compare dividend yield, payout ratio and cash flow trends across PSU stocks.
2. Open a demat and trading account with Univest for zero-brokerage execution.
3. Track ex-dividend dates and record dates for Coal India, ONGC and Power Grid through the Univest app.
4. Consult a SEBI-registered advisor before allocating a large portion of your portfolio to dividend-yield stocks.
5. Rebalance periodically as commodity cycles and capex plans shift each company’s payout capacity.

Conclusion

Coal India, ONGC and Power Grid remain the most consistently cited PSU stocks with highest dividend yield in 2026, offering yields between 4.75 percent and 6.15 percent backed by strong cash generation. Historically, PSU dividend payers have offered steadier income than private peers, though commodity cycles and policy shifts can still affect future payouts. Consult a SEBI-registered advisor before making investment decisions based on dividend yield alone.

FAQs

Which are the PSU stocks with highest dividend yield in 2026?

Ans. The PSU stocks with highest dividend yield in 2026 include Coal India near 6.15 percent, ONGC near 5.00 percent and Power Grid Corporation near 4.75 percent, all backed by strong cash flow generation.

Why does Coal India have such a high dividend yield?

Ans. Coal India has among the highest yields among PSU stocks with highest dividend yield because it generates over Rs 25,000 crore in annual free cash flow with minimal reinvestment needs and maintains a payout ratio near 47 percent.

Is ONGC’s dividend yield sustainable?

Ans. ONGC’s position among PSU stocks with highest dividend yield depends partly on crude oil prices, since its payout ratio near 38 percent is drawn from profits that move with global energy prices.

Does Power Grid’s capex plan affect its dividend?

Ans. Power Grid remains among PSU stocks with highest dividend yield because its regulated return model on transmission assets supports steady payouts even during its Rs 82,000 crore FY27-28 capex cycle.

How is dividend yield calculated for PSU stocks?

Ans. Dividend yield for PSU stocks with highest dividend yield is calculated as annual dividend per share divided by current market price, multiplied by 100.

What risks affect PSU stocks with highest dividend yield?

Ans. Key risks for PSU stocks with highest dividend yield include commodity price swings, government payout policy changes, capex trade-offs and periodic disinvestment-driven price pressure.