Impact of Dividend Payout on Profitability of Consumer Goods Firm Quoted on Nigeria Stock Exchange

Abstract

The aim of this study is to find out the impact of dividend payout on profitability of consumer goods firm quoted on the Nigerian Stock Exchange over the past seven (7) years from 2008-2014. Profitability was measured using Return on Assets (ROA) and Return on Equity (ROE). The effects of dividend payout ratio on ROA and ROE were analyzed via longitudinal panel data. The study also employed a sub-sample in order to arrive at a profound conclusion with regard to the impact of dividend policy on corporate profitability. The results of the study revealed that there was a significant relationship between dividend payout and corporate profitability in terms of return on assets and return on equity. A positive significant relationship was found between dividend payout and return on assets on one hand and return on equity on the other hand. It was recommended that, as the ultimate objective of a corporate is to maximize shareholders’ wealth hence the firm value, firm mangers should design and implement a dividend policy that will enhance the corporate profitability and shareholders wealth.

Keywords: Dividend Payout, Return on Assets, Return on Equity

DOI: 10.7176/RJFA/10-11-06

Publication date:June 30^th 2019