Dividend Policy and Corporate Performance of Listed Companies in Nigeria (2020-2025)

Abstract

This study examines the effect of dividend policy on the performance of listed companies in Nigeria from 2021 to 2025. Dividend policy, represented by Dividend Payout Ratio (DPR), Dividend Per Share (DPS), and Dividend Yield (DY), is a critical financial decision that influences firm profitability, market valuation, and shareholder wealth. The study adopted an ex-post facto research design and analyzed secondary data from annual reports of 15 purposively selected listed companies across the banking, consumer goods, and industrial sectors. Descriptive statistics, correlation analysis, and panel regression techniques-including Fixed Effects Model (FEM) and Random Effects Model (REM)-were employed to evaluate the relationship between dividend policy and firm performance measured by Return on Assets (ROA). The results indicate that DPR and DPS have a positive and statistically significant effect on firm performance, while DY does not exhibit a significant relationship. The findings suggest that Nigerian firms can enhance profitability and investor confidence by maintaining stable and higher dividend payouts, particularly through dividends per share. The study concludes that dividend policy remains a relevant tool for firm performance in Nigeria, supporting the Signaling and Bird-in-Hand theories. Recommendations include consistent dividend strategies, transparent disclosure practices, and consideration of investor expectations in dividend decision-making. The study contributes to the understanding of dividend policy’s role in enhancing corporate performance in emerging markets.