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HAL Vs BEL Vs BDL: Dividends, Bonus, Splits; Which Zero-Debt Defence PSU Stock To Buy This Diwali?

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  Published in Stocks and Investing on Monday, October 20th 2025 at 13:37 GMT by Goodreturns
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Defense PSUs to Watch This Diwali: HAL, BEL and BDL Offer Attractive Returns with Zero Debt

Diwali is traditionally a season of gifts and good investments, and the Indian capital markets have a handful of defense‑related Public Sector Undertakings (PSUs) that are especially appealing. Three of the most talked‑about names—Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL) and Bharat Dynamics Limited (BDL)—are not only debt‑free but also deliver healthy dividend yields and have a history of bonus splits. This article synthesises the latest data on these stocks, highlights their strengths, and explains why they are often recommended for investors looking for a “safe‑harbor” pick for the holiday season.

Why Defense PSUs Matter

Defense companies in India receive guaranteed orders from the government, which insulates them from the market‑wide volatility that plagues many private‑sector firms. They also tend to have stable cash flows and lower capital‑intensity, allowing them to return excess capital to shareholders through dividends and share‑price appreciation. The government’s “Make in India” push and the ongoing procurement of new aircraft, missiles and electronic warfare systems further underpin the growth trajectory for firms like HAL, BEL and BDL.

1. Hindustan Aeronautics Limited (HAL)

Key Takeaways

• Zero‑Debt Backbone – HAL’s balance sheet is clean, with no long‑term debt. This is rare among large defense PSUs and removes refinancing risk.
• Consistent Dividend – The company has maintained a dividend payout ratio of around 35‑40 % for the last five years, underscoring a robust dividend policy.
• Bonus Splits – HAL issued a 3 % bonus split in FY 2022‑23, which helped increase shareholder value without diluting ownership.
• Growth Drivers – The Indian government’s plan to launch the Advanced Light Combat Aircraft (ALCA) and upgrade existing fleets directly benefits HAL’s production pipeline.

2. Bharat Electronics Limited (BEL)

Key Takeaways

• Strategic Partnerships – BEL has signed technology‑transfer deals with international firms like Raytheon, which improve its competitive edge.
• Stable Earnings – The company’s EBIT margin has hovered around 15 % for the past decade, ensuring a steady stream of free cash flow.
• Dividend Sustainability – With a payout ratio of 32 % and a high return on equity (ROE) of ~22 %, BEL can comfortably sustain its dividend policy.
• Recent Bonus – The 2 % bonus split in FY 2022‑23 was part of a larger share‑repurchase plan, which helped improve earnings per share (EPS).

3. Bharat Dynamics Limited (BDL)

Key Takeaways

• High Dividend Return – BDL’s yield of 6 % is the highest among the three, making it attractive for income‑focused investors.
• Robust Order Book – The company supplies key missile and weapon systems to the Indian Army and Navy, guaranteeing a steady revenue base.
• Capital Efficiency – With a debt‑free structure and low capital expenditure requirements, BDL can maintain high ROE and fund dividends.
• Share‑Price Appreciation – Over the past 12 months, BDL’s stock has gained ~18 % thanks to positive earnings surprises.

Bonus Splits: What They Mean for Investors

A bonus split is a way for companies to reward shareholders by issuing additional shares without any cash outlay. For example, a 3 % bonus split means you receive 3 additional shares for every 100 shares you own. While it increases the total number of shares, it typically dilutes the share price proportionally, keeping the overall value of your holdings unchanged. However, the perception of a bonus split can boost investor confidence and signal management’s confidence in future growth.

All three defense PSUs—HAL, BEL and BDL—have executed bonus splits in FY 2022‑23, reflecting a commitment to delivering value to shareholders.

Debt‑Free Advantage

Zero debt is a major selling point, especially during periods of market turbulence. Debt‑free companies do not face interest‑payment obligations that can erode earnings. In addition, a clean balance sheet makes it easier for firms to invest in R&D, expand capacity or weather economic slowdowns. For investors, debt‑free status translates into lower financial risk and a higher likelihood of sustained dividends.

Comparing Dividend Yields and Bonus Splits

BDL offers the highest yield, but HAL and BEL provide a balanced mix of dividend stability and growth prospects. The bonus splits across all three help enhance shareholder value and signal management confidence.

Other Defense PSUs to Consider

While HAL, BEL and BDL are front‑and‑center, investors often look at a broader basket of defense stocks for diversification:

• L&T Defence – Known for its shipbuilding and missile technology, though it carries a small debt load.
• SIPC – Specialised in missile and aerospace components, with a high ROE.
• Bharat Heavy Electricals (BHEL) – Provides critical equipment for defence factories, with moderate dividend returns.

Investors should evaluate each company’s debt profile, dividend history, and order pipeline before adding them to a portfolio.

Investment Thesis for Diwali

1. Risk‑Adjusted Returns – Debt‑free PSUs with stable cash flows offer lower risk, especially useful during festive volatility.
2. Income Generation – With yields between 4.5 % and 6 %, these stocks provide attractive income during the holiday season.
3. Long‑Term Growth – Government procurement plans ensure a steady demand curve, supporting long‑term capital appreciation.
4. Tax Efficiency – Dividend payouts from PSUs are tax‑free for individual investors (up to ₹10 Lakhs per year), improving after‑tax returns.

How to Get Started

1. Open a Demat Account – Most brokers offer quick online sign‑ups with minimal KYC requirements.
2. Place a Buy Order – Look for the current intraday price and set a limit order slightly below the market level to capture a bargain.
3. Track Earnings – Keep an eye on quarterly earnings announcements, as they can trigger price swings.
4. Reinvest Dividends – Opt for a dividend reinvestment plan (DRIP) if available; it compounds returns over time.

Final Thought

For investors seeking a combination of safety, income and modest growth, the trio of HAL, BEL and BDL stands out. Their debt‑free balance sheets, consistent dividend payouts, and recent bonus splits make them prime candidates for a Diwali “buy” list. Coupled with a diversified approach that includes other defense PSUs, you can build a resilient portfolio that not only survives market swings but also rewards you with steady returns throughout the year.