Influence of Dividend Payout Rate on Financial Performance of Selected Listed Companies
Journal Title: International Journal of Current Science Research and Review - Year 2024, Vol 7, Issue 06
Abstract
The purpose of this study was to investigate the effect of dividend payout on financial performance of selected companies listed on the NSE, Kenya. The study was guided by the following specific objectives: Establish the effect of dividend payout rate on financial performance, determine the effect of dividend per share on financial performance, examine the effect of dividend yield on financial performance and determine the moderating effect of company size on financial performance of selected companies listed on Nairobi Securities Exchange. The study used longitudinal research design targeting 57 companies listed on NSE as at 31st December 2020. Purposive sampling technique was used on the target population, whereby 18 least performing companies as at 31st December 2020 were selected. A total of 90 observations were included in the dataset. Secondary data was collected mainly from NSE Handbook 2020-2021 and annual reports of the companies over five years from 2016 to 2020. The analysis involved both descriptive and inferential statistics. An empirical estimation was then carried out involving testing for stationarity of the variables, cointegration and estimating the cointegrating relation. It was expected that the output of this study provided a basis for Board of Directors and managers of companies in Kenya, Investors, Government agencies and regulatory bodies to make an informed decision and develop policies for investments. The study came with findings, made conclusions and appropriate recommendations. Based on the findings, the study concluded that dividend payout rate led to an increase in ROA of selected companies listed on Nairobi’s Securities Exchange. Therefore, dividend payout rate had a positive and significant effect on financial performance of selected companies listed on Nairobi’s Securities Exchange. When companies enhance dividend payout, there is a likelihood of improved financial performance of selected companies listed on NSE, Kenya. The study recommended that companies listed at NSE should ensure that the dividend payout rate is aligned with the company’s long-term strategic objectives. For instance, a mature, stable company may prioritize regular dividends to reward shareholders, while a growth-oriented company may reinvest profits for expansion. Furthermore, the study recommends that the government should support companies by ensuring that there are sound decision practices on dividend payout policy for the sustainability of companies. This study should be used by academicians to understand how well management allocates profits between reinvestment and shareholders returns. Dividend payout rate can be used to tell a company’s financial health and examine key financial metrices. Suggestions for further studies to be carried out in the entire East Africa Region to assess the establishment of companies in Kenya, Uganda, Tanzania, Burundi, and Rwanda, and then compare the results of those listed companies in the region. Also, more studies should be carried out in the future to investigate the effect that dividend policy contain on the expansion of the economy.
Authors and Affiliations
Philip Ojiambo Oundo, Dr. Fred Atandi, Dr. Brian Singoro,
Keywords
Related Articles
- EP ID EP738107
- DOI 10.47191/ijcsrr/V7-i6-64
- Views 8
- Downloads 0
The Effect of Capital Structure on the Ho Chi Minh Stock Exchange (HOSE) Performance of Companies Listed in the Plastics Industry
The relationship between capital structure and company performance was examined in this study. From 2019 to 2023, information was gathered from 29 plastic firms that were listed on the Ho Chi Minh Stock Exchange (HOSE)....
The Effect of Information Quality, System Quality and Organizational Capability on the Implementation of HMIS at Regional public hospital Pambalah Batung, Hulu Sungai Utara Regency
The Hospital Management Information System (HMIS) is an integral part of overall hospital services and has even become one of the main joints in daily activities. Evaluation of HMIS implementation is carried out because...
A Case Report on Transverse Myelitis
Scrub typhus is known to cause central nervous system involvement, which can show as meningitis or meningoencephalitis. However, relatively few reports of acute transverse myelitis (ATM), a spinal cord lesion, have been...
The Dual Dance: Strategies for Success in Profit and Cash Flow Management
This comprehensive guide delves into the intricate dynamics of managing profit and cash flow, offering financial managers a strategic roadmap for achieving a delicate balance. Beginning with an exploration of the symbiot...
Ameliorative Role of Grape Seed Extract (Vitis Vinifera) on Gemcitabine- Induced Testicular Damage in Rabbits
Spermatogenesis is a highly conserved and regulated process and it is sensitive to fluctuations in the physical and chemical environment. Gemcitabine is a novel antimetabolic anticancer drug used frequently in the treatm...