Best Dividend Stocks in India: 10 Worth Researching (2026)

India’s most reliable dividend payers are mostly large, cash-rich companies in three groups: government-owned energy firms such as Coal India and ONGC, IT services majors such as TCS and Infosys, and FMCG companies such as ITC and Hindustan Unilever. The ten names below have paid a dividend in each of the last five financial years, but a high yield on its own tells you very little about whether the payout will last.

This guide gives verified data for each company, explains how to separate durable dividends from yield traps, adds sector-specific notes and covers how dividends are taxed from the 2026-27 tax year. These are stocks worth researching, not recommendations to buy. Share prices, yields and payouts change every day, so check the latest figures before you act.

How to read the numbers in this article

All company figures come from screener.in, which compiles annual reports and exchange filings. Prices, market capitalisation and dividend yield are as of 1 October 2026. Financial figures are consolidated for the year ended March 2026 (FY26) unless stated, and promoter holdings are as of June 2026.

• Dividend yield is dividends paid over the past 12 months divided by the current share price. When a share price falls, the yield rises even if the dividend has not changed.
• Payout ratio is the share of net profit paid out as dividends. A 60% payout means ₹60 of every ₹100 of profit went to shareholders.
• Free cash flow (FCF) is cash from operations minus capital spending. Dividends are paid in cash, not in accounting profit, so FCF is the better test of what a company can afford.

10 dividend stocks worth researching: the data

Company	Sector	Market cap (₹ crore)	Dividend yield	Payout ratio FY22 / FY23 / FY24 / FY25 / FY26	FY26 free cash flow (₹ crore)
Coal India	PSU energy (coal)	2,59,081	6.30%	60 / 47 / 42 / 46 / 53%	30,783
ONGC	PSU energy (oil and gas)	2,79,748	5.96%	29 / 40 / 31 / 43 / 22%*	72,219
Indian Oil	PSU energy (refining)	1,85,468	6.28%	46 / 42 / 40 / 30 / 27%	48,881
Power Grid	PSU power transmission	2,36,747	3.54%	61 / 67 / 67 / 54 / 53%	3,687
GAIL	PSU gas transmission	1,12,579	3.21%	36 / 59 / 37 / 40 / 48%	2,451
ITC	FMCG and cigarettes	3,20,656	5.67%	93 / 100 / 84 / 52 / 88%	16,332
Hindustan Unilever	FMCG	4,31,385	2.23%	90 / 91 / 96 / 117 / 64%	9,667
TCS	IT services	7,50,753	3.08%	41 / 100 / 58 / 94 / 81%	48,013
Infosys	IT services	4,20,032	4.64%	59 / 58 / 73 / 67 / 66%	31,259
HCLTech	IT services	3,37,336	4.34%	84 / 88 / 90 / 94 / 88%	18,576

*ONGC’s FY26 payout ratio may not yet reflect its full final dividend; check the latest figure on the company’s investor page.

Source: screener.in (prices and yields as of 1 October 2026; financials for years ended March). All ten companies sit above or near AMFI’s large-cap cut-off of about ₹1,06,300 crore in its July 2026 list. GAIL is the closest to that line.

How to evaluate a dividend stock

1. Watch for the yield trap

A yield trap is a stock whose yield looks high because its price has fallen, often because the market expects the dividend to be cut. The yield is calculated on last year’s dividend, so it can stay high right up to the moment the cut is announced.

Vedanta shows the warning signs clearly. On 1 October 2026 it yielded 13.5%, more than double most names above. But its payout ratio was 357% in FY23 and 259% in FY24, meaning it paid out several times what it earned, while consolidated borrowings rose from ₹53,583 crore in March 2022 to ₹87,706 crore in March 2024. The group has since gone through a demerger. A payout that large cannot be repeated from profits alone, which is why we’ve left it off the main list.

2. Check the payout ratio over several years

A single year’s payout ratio can mislead in either direction. ITC’s payout dropped to 52% in FY25 only because that year’s profit of ₹35,052 crore was inflated (its FY24 and FY26 profits were ₹20,751 crore and ₹21,018 crore). Hindustan Unilever’s payout fell to 64% in FY26 when profit jumped to ₹15,059 crore; screener flags that its earnings include ₹4,933 crore of other income. In both cases, the dividend was not cut. The denominator moved.

As a rough guide, a payout consistently above 100% is a red flag unless the company has large surplus cash and little need to reinvest. A steady 40–70% leaves room to keep paying even if profits dip for a year.

3. Compare dividends with free cash flow

Power Grid’s payout ratio has been a stable 53–67% for five years, but its free cash flow fell from ₹31,102 crore in FY23 to ₹3,687 crore in FY26 as capital spending on new transmission lines rose, and borrowings climbed from ₹1,31,030 crore to ₹1,48,071 crore over FY25–FY26. Its debt-to-equity ratio is about 1.5 (₹1,48,071 crore of borrowings against ₹1,00,494 crore of equity). That does not mean the dividend is at risk, since regulated transmission earnings are predictable, but it does mean part of the payout is effectively supported by borrowing during a heavy investment phase.

The IT companies are the opposite case. TCS generated ₹48,013 crore of free cash flow in FY26 against net profit of ₹49,454 crore, and Infosys generated ₹31,259 crore against ₹29,474 crore. Nearly every rupee of profit turned into cash.

4. Look for consistency through a bad year

The real test is what a company paid when profits fell. Indian Oil’s earnings per share swung from ₹17.78 in FY22 to ₹6.93 in FY23, back to ₹29.55 in FY24, down to ₹9.63 in FY25 and up to ₹29.81 in FY26. Its dividend followed profits closely. Refining margins drive that cycle, so a 6% yield in a good year should not be treated as a reliable income figure.

5. Do not ignore valuation

A 3% yield on a stock that falls 25% is a poor trade. Check the P/E ratio against the company’s own history and its sector, and read our guide on how to tell if a stock is overvalued. As of 1 October 2026, P/E ratios ranged from 5.5 for Indian Oil to 39.1 for Hindustan Unilever.

Sector notes

PSU energy: Coal India, ONGC, Indian Oil, Power Grid, GAIL

Government-owned companies tend to pay generous dividends partly because the Centre, as majority owner, relies on them for non-tax revenue. The Government of India held 61.13% of Coal India, 58.89% of ONGC, 51.50% of Indian Oil, 51.34% of Power Grid and 51.79% of GAIL as of June 2026. That support for payouts is a strength, but it also means dividend decisions can reflect the government’s budget needs, not only the company’s.

• Coal India mines and sells most of India’s coal. ROCE (return on capital employed, a measure of how efficiently a company uses all its capital) was 35% in FY26, and the stock traded at a P/E of 8.3. The long-term risk is the energy transition, as solar and wind take a larger share of new power capacity.
• ONGC is India’s largest crude oil and natural gas producer. It generated ₹72,219 crore of free cash flow in FY26, but its payout ratio fell to 22% in FY26 on screener’s data, from 43% in FY25. Profits track crude prices and any government-set gas pricing or windfall taxes.
• Indian Oil refines and markets fuel. Earnings are cyclical, as shown above, so look at average payouts across the cycle.
• Power Grid is India’s largest electricity transmission company. Its revenue is regulated, which makes it steadier than the oil companies, but debt is rising with its capex plan.
• GAIL runs India’s largest natural gas pipeline network, plus gas marketing and petrochemicals. Net profit fell from ₹12,463 crore in FY25 to ₹7,582 crore in FY26, and free cash flow has been thin in most recent years.

IT services: TCS, Infosys, HCLTech

IT companies need little capital to grow, so they return most of their cash through dividends and occasional buybacks. HCLTech paid out 84–94% of profit in each of the last five years, and Infosys 58–73%. TCS’s payout swings more (41% to 100%) because it alternates between special dividends and buybacks. All three were close to debt-free with ROCE of 30% or more in FY26.

The risk here is growth, not cash. Revenue depends on US and European technology budgets and on how AI changes demand for outsourced services. Share prices fell sharply over the past year: on 1 October 2026, TCS traded at ₹2,075 against a 52-week high of ₹3,350, which is one reason its yield has risen to about 3%.

FMCG: ITC, Hindustan Unilever

Consumer companies with strong brands generate steady cash and need modest reinvestment, so they can pay out most of their profit. ITC earns a large part of its profit from cigarettes, which brings the risk of tax increases on tobacco. Hindustan Unilever sells home care, beauty and food products and has almost no debt, but its five-year sales growth has been slow and the stock traded at a P/E of 39.1, so its yield is lower.

How dividends are taxed in India (tax year 2026-27)

The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026, but the basic treatment of dividends has not changed. Dividends are added to your total income and taxed at your slab rate, whether you use the old or new regime.

• TDS: a company deducts 10% tax at source if it pays you more than ₹10,000 in dividends in a tax year (section 393 of the new Act, which replaces the old section 194). The rate is 20% if you have not furnished your PAN.
• No-TDS declaration: if your total income is below the taxable limit, you can submit a declaration to the company’s registrar. Form 121 has replaced the old Forms 15G and 15H.
• Interest deduction removed: until March 2026, you could deduct interest on money borrowed to buy shares, up to 20% of your dividend income. Budget 2026 removed this deduction from 1 April 2026.
• Rebate: under the new regime, income up to ₹12 lakh is effectively tax-free because of the rebate, and dividends count as normal income for this purpose. If you fall within that limit, you can claim back any TDS as a refund when you file your return.

Capital gains on selling the shares are taxed separately: 20% for holdings of 12 months or less and 12.5% above ₹1.25 lakh a year for longer holdings. Our guide on reducing capital gains tax on shares covers that side.

Worked example: what a 6% yield is worth after tax

Suppose Priya, whose other income puts her in the 30% slab under the new regime, holds ₹5,00,000 of a single stock with a 6% dividend yield.

1. Dividend received in the year: ₹5,00,000 × 6% = ₹30,000.
2. TDS: the dividend exceeds ₹10,000, so the company deducts 10% = ₹3,000. Priya receives ₹27,000 in her bank account.
3. Actual tax at 30% plus 4% cess (31.2%): ₹30,000 × 31.2% = ₹9,360.
4. Balance payable when she files: ₹9,360 − ₹3,000 = ₹6,360.
5. Net dividend kept: ₹30,000 − ₹9,360 = ₹20,640, an after-tax yield of 4.13%.

Surcharge would apply on top if her income exceeds ₹50 lakh. For investors in the top slab, a growth-oriented holding taxed at 12.5% on long-term gains can leave more money in hand than a high-dividend one. Our article on whether shareholders make money only from dividends looks at that trade-off.

A checklist before you add a dividend stock

1. Has the company paid a dividend every year for at least five years, including a weak one?
2. Is the average payout ratio below 100%, and is any spike explained by a one-off?
3. Does free cash flow cover the dividend in most years?
4. Is debt stable or falling, and is debt-to-equity reasonable for the sector?
5. Is the yield high because the dividend rose, or because the share price fell? Read recent results to find out why.
6. Is the valuation reasonable against the company’s history?
7. Will one sector make up too much of your portfolio? Five of the ten names above are energy PSUs. See our guide to asset allocation.

Risks and common mistakes

• Buying just before the record date. The share price usually falls by roughly the dividend amount on the ex-dividend date, and the dividend is then taxed at your slab. Buying only to capture a dividend rarely adds value.
• Treating dividends as guaranteed. Companies can cut or skip a dividend at any time. Commodity-linked companies are the most likely to do so.
• Concentrating in PSUs. Government shareholders can push for higher payouts, disinvest through offers for sale, or ask companies to fund policy goals.
• Ignoring total return. A stock yielding 6% that falls 10% has lost you money. Reinvesting dividends over long periods is what drives compounding.

Please note: this list is for education and research only. It is not a recommendation to buy, sell or hold any security, and StocksInfo.ai is not a SEBI-registered investment adviser. Market data in this article is dated and will change; verify current figures on the exchange website or the company’s latest filings before making any decision.

FAQ

Which Indian stock has the highest dividend yield?

It changes daily with share prices. Among large companies, PSU energy stocks such as Coal India and Indian Oil yielded over 6% as of 1 October 2026, and Vedanta yielded 13.5%. The very highest yields often belong to companies whose share price has fallen or whose dividend may not be repeated, so check the payout history first.

Is dividend income tax-free in India?

No. Since April 2020, dividends are taxed in the shareholder’s hands at slab rates. Companies deduct 10% TDS on dividends above ₹10,000 a year. If your total income is within the ₹12 lakh new-regime rebate limit, you may owe no tax and can claim a refund of the TDS.

What is a good dividend payout ratio?

For most companies, 40–70% over several years balances shareholder income with reinvestment. Asset-light businesses such as IT services and FMCG can sustain higher payouts. A ratio above 100% for more than a year usually means the company is paying from reserves or borrowings.

Do I need to hold shares on the record date to get the dividend?

Yes. Under India’s T+1 settlement, you must buy the shares before the ex-dividend date, which is usually the same as the record date, for your name to appear in the register. Shares bought on or after the ex-date do not qualify for that dividend.

Are dividend mutual funds a better option?

Dividend yield funds hold a basket of high-dividend stocks, which spreads company-specific risk. Their IDCW payouts are also taxed at your slab rate, so the tax treatment is similar. For many investors the growth option of a fund is more tax-efficient than receiving regular payouts.