Earn ₹90,000 Yearly on a ₹10 Lakh Investment: Top 5 PSU Stocks Crushing Bank FD Rates in 2026

Mumbai: In an era where traditional Fixed Deposits (FDs) are struggling to keep pace with inflation—averaging a modest 6.5% to 7.2%—smart Indian investors are looking elsewhere. The secret? High-Yield PSUs. As of early 2026, several Public Sector Undertakings (PSUs) are sitting on record cash piles, driven by India’s massive infrastructure push. These government-backed giants are mandated to return a significant portion of their profits to shareholders, creating a "Golden Era" for dividend seekers.

Here is the deep-dive research into the Top 5 PSU stocks that are currently crushing FD returns.

The "High-Yield Five" of 2026

Why These PSUs are Dominating in 2026

1. Coal India: The Undisputed King

With India's peak power demand hitting record highs in 2026, Coal India’s cash reserves have ballooned. The company has a policy of distributing nearly 70-80% of its PAT (Profit After Tax). At a yield of over 9%, an investment of ₹10 Lakhs in CIL could fetch you approximately ₹90,000 annually, compared to just ₹70,000 in an FD.

2. REC & PFC: The Energy Financiers

As the primary lenders for India's "Green Energy Mission," these NBFCs are earning high-interest margins. They have consistently outperformed the Nifty 50 in dividend consistency, making them a staple for retired investors seeking monthly/quarterly income.

3. NMDC: The Iron Pillar

With the construction boom in full swing, NMDC’s iron ore sales are at an all-time high. Their debt-free balance sheet allows them to reward shareholders generously even during market volatility.

FD vs. PSU Dividends: The Wealth Gap

While an FD offers capital protection, it lacks capital appreciation. If you invest in a PSU:

1. Dividend: You get a steady yield (e.g., 8%).

2. Stock Growth: In 2025-26, many PSU stocks grew by 15-20% in price.

3. Total Return: You could potentially see 25%+ annual returns, whereas an FD remains capped at 7%.