THE EFFECTS OF DIVIDEND POLICY ON FIRMS’ FINANCIAL PERFORMANCE; A STUDY OF SELECTED DEPOSIT BANKS IN NIGERIA

This study investigates the relationship between financial performance and dividend policy for a sample of fifteen Deposit money Banks quoted on the Nigeria Stock Exchange between 2017 and 2022. Panel data analysis was used as the method of analysis and the model was estimated using the pooled least squares estimation technique. The study revealed that there is a positive and significant relationship between dividend payout ratio and financial performance; firms should strive to maintain health and stable dividend policies. This could be attained by investigating in projects that give positive Net present values, thereby generating huge earnings, which can be partly used to pay dividend to their equity shareholders. It is also proposed that prospective investors should be encouraged to have stake in firms that pay dividends consistently because of the belief that affirm that pay dividend is financially stable. Nigerian companies and Allied Matters Act (2004) specifically states that dividend can only be paid out of profit. It is also recommended that since dividend yield is not affected by financial performance, investigators should be made to ascertain other factors that affect dividend yield.