Coal India vs ONGC: Which PSU Giant Will Pay Higher Dividends in 2026?

Mumbai: For Indian investors seeking passive income, the "Battle of the PSUs" (Public Sector Undertakings) is reaching a fever pitch in 2026. Two titans stand tall: Coal India Limited (CIL), the black-gold miner, and ONGC, the oil and gas explorer.

As the Indian economy powers toward the $5 trillion mark, both companies are generating record cash flows. But if you have to pick one for your portfolio for 2026, who wins on dividends? Here is the deep-dive research.

1. Coal India (CIL): The Cash Machine

Coal India remains the primary fuel supplier for India’s power sector. In 2026, despite the push for renewables, coal demand for thermal power is at an all-time high to support industrial growth.

• The Dividend Strategy: CIL has a low "Capital Expenditure-to-Revenue" ratio compared to oil companies. This means most of the profit stays as "Free Cash Flow," which is distributed to shareholders.

• Dividend Yield (2026 Est.): Historically hovering between 7% and 9.5%, CIL is expected to maintain a High Yield of ~8.2% in 2026.

• Key Strength: It is the government's favorite "Piggy Bank." Whenever the center needs funds, CIL announces a fat interim dividend.

2. ONGC: The Profit Volatility Play

ONGC’s fortune is tied to the global "Brent Crude" prices. While its scale is massive, its business is much more capital-intensive.

• The Growth Factor: In 2026, ONGC is investing heavily in green hydrogen and deep-water exploration in the KG Basin. While this is great for the share price (capital appreciation), it can occasionally limit the immediate dividend payout.

• Dividend Yield (2026 Est.): If crude oil stays between $75–$85 per barrel, ONGC is likely to offer a Moderate Yield of ~4.5% to 5.5%.

• Key Strength: If global geopolitics cause an oil spike, ONGC’s profits skyrocket, leading to massive "Special Dividends."

The Showdown: Head-to-Head Comparison