EFFECT OF DIVIDEND POLICY ON FINANCIAL PERFORMANCE OF MANUFACTURING FIRMS IN NIGERIA

ABSTRACT

This paper examined the effect of dividend policy on financial performance of manufacturing firms in Nigeria. The effect of dividend policy on firm’s performance has been a really big controversial issues among scholars in financial management. As many factors affect the performance of firms and dividend policy poses as one of those factors. The study had two (2) specific objectives, two (2) research questions and two (2) hypotheses. The study had a population of 31 manufacturing firms under the consumer and industrial goods segment quoted in Nigeria Stock Exchange. Judgmental sampling technique was employed to arrive at our sample size of five (5) firms which included Cadbury Nigeria PLC, Nigerian Breweries PLC, Dangote Cement PLC, CAP PLC and PZ Cusson Nigeria PLC. Secondary panel data were pooled from the audited financial statements of these companies ranging from the period of 2015-2018. Regression
analysis were carried out on the data with the aid of E-views package. The result of the data analysis showed that dividend per share, and dividend payout ratio exert a positive but insignificant effect on return on Asset. The study therefore concluded that dividend policy has no significant effect on financial performance of manufacturing firms in Nigeria. One of the recommendations of this study is that dividend payout ratio should be drastically reduced as to ensure that a major part of the earnings of the company is not paid out as dividends but rather ploughed back into the firms to be reinvested or as part of the cash reserves.