Author(s): Omankhanlen Alexander Ehimare, Nwuba Emeka, Ehikioya Benjamin, Chimezie Onyedikachi Peace
This article focused on the study of firm-specific factors that influence dividend decisions among selected firms listed on the Nigerian Stock Exchange. Samples were drawn from twenty companies for a period of ten (10) years (2008 to 2017). Econometric multiple regression models were used to analyze the data and establish the relationship. Various proxies have been used in the literature to represent company dividend policy including dividend per share (DPS), dividend yield and dividend payout ratio. This study adopted DPS as the closest proxy for dividend policy because of its stable nature and relative freedom from the impact of other exogenous variables since the denominator (no of shares) is stable over time leaving the impact of growth in absolute dividend to be noticed over time. Seven firm-specific variables were identified and used in the study. These include earnings per share (EPS), return on equity (ROE), return on assets (ROA), free cash flow per share (FCF/S), Leverage (LEV), net profit margin (NPM) and price-earnings-ratio (PER). The results show that out of the seven variables tested; only EPS has a positive and significant impact on the dividend policy of the firms. EPS, FCF/S, PER have positive but insignificant relationship with dividend policy while Leverage, ROA and NPM have negative but insignificant relationship with the dividend policy of companies quoted on the Nigerian Stock Exchange. We therefore recommend that income-seeking investors should pay more attention to companies that have demonstrated consistent and growing EPS over time. They should also be critical of heavily geared companies whose dividend paying ability might be impaired due to huge cash outflow from loan repayments.