FINANCIAL PERFORMANCE AND DIVIDEND POLICY OF DEPOSIT MONEY BANKS IN NIGERIA

ABSTRACT

This study investigated the relationship between financial performance and dividend policy for a sample of fifteen deposit money banks quoted on the Nigeria Stock Exchange between 2010 and 2019. The statistical methods used for the analysis are descriptive statistics, correlation results, and panel least square. The study revealed that there is a positive but no significant relationship between financial performance and dividend payout ratio; and there is a positive but not significant relationship between financial performance and dividend yield. The study recommended since financial performance is not affected by dividend yield and dividend payout, investigations should be made to ascertain other factors that affect financial performance in the banking sector. Also firms should focus attention on increasing their profitability through capturing more market size to have sufficient fund for paying dividend, when necessary firms should only undertake ventures that increase the positive net present value of the firm. That firm should strive to maintain constant and healthy dividend policies; this could be attained by investing in projects that give positive net present values, thereby generating huge earnings, which can be partly used to pay dividends to their equity shareholders.

Key words: Financial performance, Return on equity, Dividend payout, dividend yield,