Life Insurance Corporation of India may have had India's largest IPO so far, but when it comes to rewarding shareholders, it falls behind most of its state-run peers. Two of India's largest IPOs, LIC and SBI Card and Payment Services have dividend yields that rank among the lowest when compared to other Public Sector Enterprises.

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Both these companies feature among the top 10 state-run companies with the lowest dividend yield. While LIC's shares are down over 30 percent from their issue price nearly 15 months after listing, its dividend yield also stands at only 0.46 percent. The dividend yield for SBI Cards is even lower, at 0.3 percent.

According to Bloomberg data of over 90 PSUs, SBI Life Insurance has the lowest dividend yield of 0.2 percent, while New India Assurance, which raised as much as Rs 9,600 crore through its IPO, has a dividend yield of 0.24 percent.

Dividend yield is a financial ratio that measures the amount of cash dividend paid to shareholders, relative to the company's market capitalisation. It is calculated by dividing the dividend per share by the market price per share and multiplying the result by 100.

India's state-run companies doled out record dividends that crossed Rs 1 lakh crore for the second year in a row in financial year 2023. However, more than half, or Rs 56,500 crore came only from five companies - Coal India, ONGC, Power Grid, State Bank of India, and NTPC.

It therefore comes as no surprise that Coal India has the highest dividend yield among its peers at 10.7 percent. Stocks like ONGC and Power Grid also have dividend yields in excess of 6 percent.

On the flip side, as many as 41 state-run companies have a dividend yield which is higher than the benchmark Nifty 50 index's dividend yield of 1.5 percent. A dividend payout also acts as a buffer for the centre for meeting its disinvestment targets.

The revised disinvestment target for financial year 2023 was Rs 50,000 crore, whereas the receipts for the year were just around Rs 35,294 crore. Of this, nearly 97 percent came from the LIC IPO, in which the government sold 3.5 percent of its stake.

First Published:Aug 22, 2023 9:11 AM IST