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Dividend Yield: 5%

Coal India's dividend yield stands at 4.98%, ranking in the top 25% of Indian market payers, yet its sustainability is questionable with a cash payout ratio of 1226%, indicating dividends are not well covered by free cash flows. While dividends have increased over the past decade, they've also been marked by significant volatility and lack of reliable growth. Financially, Coal India's P/E ratio is attractively low at 8.4x compared to the broader Indian market's 34x, and recent operational results show a production increase to 189.3 million tonnes from April to June 2024, up from 175.5 million tonnes year-over-year, suggesting some operational momentum despite broader financial concerns regarding dividend payouts.

• Click to explore a detailed breakdown of our findings in Coal India's dividend report.

• Upon reviewing our latest valuation report, Coal India's share price might be too pessimistic.

Oil and Natural Gas

Simply Wall St Dividend Rating: ★★★★★☆

Overview: Oil and Natural Gas Corporation Limited (ONGC) operates in exploration, development, and production of crude oil and natural gas both domestically in India and internationally, with a market capitalization of approximately ₹4.06 trillion.

Operations: Oil and Natural Gas Corporation Limited generates revenue primarily through refining and marketing (₹56.75 billion), onshore exploration and production (₹4.39 billion), and offshore exploration and production (₹9.43 billion) within India, along with international operations contributing ₹95.53 billion.

Dividend Yield: 3.8%

Oil and Natural Gas Corporation (ONGC) offers a dividend yield of 3.8%, placing it among the top 25% of Indian dividend payers. Despite this, its dividend history over the past decade has been marked by volatility, with payments not consistently growing or stable year-over-year. However, ONGC's dividends are sustainably covered by both earnings and cash flows, with a payout ratio of 31.3% and a cash payout ratio of 32.5%. Additionally, trading at a P/E ratio of 8.2x—well below the Indian market average—suggests relative undervaluation compared to peers.

• Click here and access our complete dividend analysis report to understand the dynamics of Oil and Natural Gas.

• Our valuation report unveils the possibility Oil and Natural Gas' shares may be trading at a discount.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include NSEI:BPCL NSEI:COALINDIA and NSEI:ONGC.

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