AKANI, Henry Waleru
Department of Banking and Finance,
Rivers State University
Port Harcourt, Rivers State, Nigeria
JAMES, Sarakiri A.
C/o Department of Banking and Finance,
Rivers State University
Port Harcourt, Rivers State, Nigeria
ABSTRACT
This study examined the relationship between dividend policy decisions and profitability of
quoted food and beverages manufacturing firms in Nigeria. The purpose of the study was to
ascertain the direction and magnitude of dividend policy decisions’ effects on profitability of
quoted food and beverages manufacturing firms. Secondary data obtained from 10 quoted food
and beverages manufacturing firms from 2010-2019 obtained from the Nigerian Stock Exchange
FactSheet and annual reports of the food and beverage firms were used. Return on equity was
used to represent profitability while retained earnings, dividend payout rate, dividend yield and
dividend per share were employed as proxies of dividend policy decisions. The study employed
panel data in the analysis while the fixed effects model was used as estimation technique at 5%level of significance. Fixed effects, random effects and pooled estimates were tested while the
Hausman test was used to determine the best fit. The estimated regression results found that 77
per cent variation on return on equity of quoted food and beverages manufacturing firms in
Nigeria can be traced to dividend policy decisions. Beta coefficient of the variables indicates that
dividend policy decisions have positive and statistically significant relationship with debt
financing of the quoted food and beverages manufacturing firms. The study concluded that
dividend policy decisions affect profitability of quoted food and beverages manufacturing firms
through return on equity; and recommends that quoted food and beverages manufacturing firms
in Nigeria that seek increased profitability should adopt dividend policy decisions that prioritizes
increased retained earnings, dividend yield, dividend per share and reduced payout ratios.
Keyword: Dividend policy decisions, profitability, retained earnings, dividend payout rate,
dividend yield and dividend per share