RELATIONSHIP BETWEEN DIVIDEND PAYOUT AND FINANCIAL PERFORMANCE OF MANUFACTURING FIRMS IN NIGERIA

Abstract

Previous studies have indicated that dividend policy remains a controversial issue in corporate finance. Specifically, the results of prior studies on the relationship that exists between dividend payout and organizational performance have been conflicting and open to further research. Thus, this study examined the effects of dividend payout on performance of manufacturing firms in Nigeria. Data were obtained from secondary sources, particularly five (5) years audited financial statements of ten randomly selected companies, making a total of fifty firm years. The results of the regression analysis revealed a significant and positive relationship between dividend payout and profit after tax on one hand; but no significant relationship between dividend payout and shareholders’ funds on the other hand. One of the recommendations is that the boards of directors of the manufacturing firms are to ensure that dividends payment is sustained so as to continually boost the firms’ profitability