ASSESSMENT OF DIVIDEND POLICY ON FINANCIAL PERFORMANCE OF TELECOMMUNICATION COMPANIES QUOTED AT THE NAIROBI SECURITIES EXCHANGE

Abstract

The purpose of this study was to find out the effect of dividend policy on financial performance of companies quoted at the Nairobi Securities Exchange (NSE). The study sourced data from secondary sources. Random sampling technique was adopted in this study. A sample of 30 listed companies at NSE was used. A regression relationship was generated to show the extent to which each independent variable influenced the dependent variable. A correlation analysis was also performed to find how the variables are related to each other in the model. The study concluded that there is a significant relationship between dividend pay-out ratio and dividend per share. It further indicated that the relationship is not only significant but also direct such that a unit change in dividend per share is followed by a unit positive change in retained earnings. The study also found out that the performance of returns on equity is higher than the performance of all the other variables as given in the trends. The trends illustrated that returns on equity recorded a constant performance while that of dividend pay-out ratio recorded a decreasing trend though that of dividend per share showed more upwards and downwards trends in most cases.