Companies listed on the Pakistan Stock Exchange (PSX) distributed a record Rs1.01 trillion in cash dividends during FY26, marking a 19.18% increase from the previous year and taking annual dividend payments above the Rs1 trillion level for the first time. According to the report, total dividend payouts reached Rs1,011,727 million during FY26, compared with Rs848,907 million in FY25. The increase amounted to Rs162,820 million over the previous year and extended the market’s uninterrupted five-year growth in dividend distributions following the pandemic-related decline recorded in FY20.
The strong dividend performance also reflects the substantial increase in payouts over the past decade. Dividends distributed by PSX-listed companies climbed 187.15% from Rs352,333 million in FY16 to Rs1,011,727 million in FY26. This represents a compound annual growth rate of 11.12% over the ten-year period. The latest figures indicate that dividend distributions have continued to expand as listed companies generate earnings and return a greater portion of their profits to shareholders through cash payouts.
Commercial banks remained the largest contributors to the overall dividend pool during FY26, distributing Rs406.79 billion to shareholders. Bank dividend payments increased 30.5% compared with Rs311.62 billion in FY25, meaning the sector accounted for more than 40% of total dividends distributed across the market during the year. The significant contribution from banks played a major role in pushing the overall market payout beyond the Rs1 trillion threshold.
Oil and gas exploration companies were the second-largest contributors to dividend payments, with distributions increasing 19.3% to Rs149.96 billion in FY26 from Rs125.68 billion in the preceding year. The sector continued to provide a substantial source of income for equity investors, supported by its position among the major dividend-paying industries listed on the stock exchange.
The fertiliser sector ranked third in terms of dividend contributions, although its payouts moved in the opposite direction. Dividend payments from fertiliser companies declined 6.7% to Rs91.57 billion during FY26 from Rs98.14 billion in FY25. Despite the reduction, the sector remained one of the largest contributors to total market-wide dividends and continued to represent a significant component of income available to shareholders.
Several other sectors also recorded notable changes in their dividend distributions during the year. Food and personal care companies increased their payouts by 34.5% to Rs64.36 billion. The technology and communication sector recorded an even sharper increase, with dividend payments more than quadrupling to Rs23.86 billion from Rs4.67 billion in FY25. The rise indicates a substantial increase in cash distributions from companies operating in the technology and communication segment.
Not all sectors recorded increases, however. Tobacco companies saw their dividend payments decline by 13.5%, while power generation and distribution companies recorded a 16% reduction in payouts. These declines contrasted with the broader increase across the market and contributed to differences in dividend performance between individual sectors.
A director of research at a leading brokerage said Pakistan’s equity market has provided an average dividend yield of 9.3% over the past decade, making it one of the more attractive dividend-paying markets in the region. The analyst noted that the current market dividend yield stands at around 7.5%, which is nearly twice the average yield available in regional markets. The Pakistan Stock Exchange is also trading at a price-to-earnings multiple of approximately seven times, according to the analyst.
The combination of dividend income and potential capital appreciation could provide investors with two sources of returns from the equity market. While dividend payments provide direct cash income to shareholders, changes in share prices can provide additional returns for investors who hold stocks that appreciate in value. The strong payout figures recorded during FY26 therefore underline the importance of dividend-paying companies within Pakistan’s equity market.
The strong performance of commercial banks was linked to several factors, including higher investment-to-deposit ratios. Banks increased their exposure to government securities as government financing requirements remained elevated, allowing the banking sector to play a larger role in meeting the government’s borrowing needs. This increased allocation towards government securities contributed to the earnings profile of banks and supported their ability to distribute dividends to shareholders.
Limited access to external financing also contributed to the increased reliance on the domestic banking sector for government funding. Restrictions on direct government borrowing from the State Bank of Pakistan under the International Monetary Fund programme meant that the government increasingly relied on banks to meet its financing requirements. Commercial banks consequently became important participants in the government securities market, increasing their exposure to these instruments.
Another factor supporting banks’ dividend capacity was their relatively low deposit costs. A higher proportion of current accounts and limited returns on savings deposits helped banks maintain comparatively lower funding costs. This supported their overall earnings position and provided greater capacity for shareholder distributions.
The record Rs1.01 trillion dividend payout marks an important development for Pakistan’s equity market, particularly for investors seeking regular income from listed companies. The increase from Rs848.91 billion in FY25 demonstrates the continued expansion of cash distributions, while the contribution from banks, oil and gas exploration companies, fertiliser firms and other major sectors highlights the diverse sources of dividend income available through the PSX.
With total annual payouts crossing the Rs1 trillion mark for the first time, dividend income has gained further significance within Pakistan’s equity market. The FY26 figures also show that dividend distributions have maintained their upward trajectory over the past five years, despite variations in performance across individual sectors.
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