Dividend Policy and Financial Performance of Listed Consumer Goods Firms in Nigeria

Abstract

This study examined the effect of dividend policy on the financial performance of listed consumer goods firms in Nigeria. The study employed secondary data obtained from published annual reports of selected firms covering a ten-year period (2014–2025). Dividend policy was proxied by dividend payout ratio (DPO), dividend per share (DPS), and dividend yield (DY), while financial performance was measured using return on assets (ROA). The data were analysed using descriptive statistics, correlation analysis, and random effects regression models. The descriptive analysis revealed substantial variability in dividend policy indicators, with evidence of extreme values across firms. Correlation analysis showed that DPO, DPS, and DY were positively associated with ROA, although DPO and DY exhibited very strong interdependence. Regression results indicated that DPO (β = 0.174, p < .05) and DPS (β = 39.73, p < .05) had significant positive effects on ROA, while DY (β = -128.38, p > .05) had a negative but insignificant effect. The overall model was statistically significant (F = 5.69, p < .001), with an R² of 0.582, implying that dividend policy variables explained about 58% of the variation in firm performance. The findings imply that dividend policy is relevant for enhancing the profitability of consumer goods firms in Nigeria. Specifically, dividend payout and dividend per share significantly drive performance, while dividend yield does not. The study recommends that firms maintain optimal dividend payout practices and prioritize sustainable dividend per share policies to enhance profitability and investors’ confidence.