Companies listed on the Pakistan Stock Exchange (PSX) distributed a record Rs1.01 trillion in cash dividends during FY26, marking a 19.18% increase compared with the previous year.
According to a report, total dividend payouts reached Rs1,011,727 million in FY26, compared with Rs848,907 million in FY25. The increase of Rs162,820 million pushed annual dividends above the Rs1 trillion mark for the first time.
The rise also extended the market’s uninterrupted five-year growth in dividend payouts following the pandemic-related decline in FY20.
Over the past decade, dividends distributed by PSX-listed companies increased by 187.15%, rising from Rs352,333 million in FY16 to Rs1,011,727 million in FY26. This represents a compound annual growth rate of 11.12%.
Commercial banks remained the largest contributors to overall dividend payments, distributing Rs406.79 billion during FY26.
Bank dividends increased by 30.5% from Rs311.62 billion in FY25, accounting for more than 40% of total market-wide payouts.
Oil and gas exploration companies ranked second, with dividends rising 19.3% to Rs149.96 billion from Rs125.68 billion a year earlier.
The fertiliser sector remained the third-largest contributor, although its dividend payments declined 6.7% to Rs91.57 billion, compared with Rs98.14 billion in FY25.
Other sectors also recorded significant changes. Dividends from food and personal care companies increased 34.5% to Rs64.36 billion, while technology and communication companies more than quadrupled their payouts to Rs23.86 billionfrom Rs4.67 billion.
Tobacco companies and power generation and distribution firms recorded declines of 13.5% and 16%, respectively.
A director of research at a leading brokerage said Pakistan’s equity market has delivered an average dividend yield of 9.3% over the past decade, making it one of the most attractive dividend-paying markets in the region.
The analyst noted that the market currently offers a dividend yield of 7.5%, nearly twice the average yield of regional markets, while the PSX is trading at a price-to-earnings multiple of around seven times.
The analyst also highlighted the potential for investors to benefit from both dividend income and capital appreciation.
The strong dividend performance of commercial banks was attributed to higher investment-to-deposit ratios as banks increased their exposure to government securities amid higher government financing requirements.
Limited access to external funding and restrictions on direct government borrowing from the State Bank of Pakistan under the IMF programme also contributed to increased government financing through the banking sector.
Banks’ relatively low deposit costs, supported by a higher proportion of current accounts and limited returns on savings deposits, further helped strengthen their ability to distribute dividends.
The record payout highlights the growing importance of dividend income for investors in Pakistan’s equity market.
