Relationship Between Dividend Payout and Stocks Performance of Listed Commercial and Services Companies in Kenya

Abstract

The study on the relationship between dividend payout and stocks performance of listed commercial and services companies in Kenya was carried out using desk research and secondary sources from credible sources within the market. The companies involved were all listed under the Nairobi Securities‟ Exchange. Data collection was the most extensive part of the research, with data from the 11 companies listed under the section collected and analyzed. The analysis led to the development of four major categorizations for the variables that would be used in the research. These include; the Return on Assets, the Size of the Firms, the Dividend Payout Ratios and the Leverage analysis. The companies were analyzed and the averages for the four variables determined. The research also determined the highest values as well as the lowest values from the companies listed, basing on the four variables predetermined. The findings from the data analysis were that; the dividend payout was the most influential factor in determining stock performance. The firm size was also a significant factor but the leverage ratio was quite insignificant. The research concluded that companies need to put in place measures to ensure dividend payouts regardless of low profit earnings. This would encourage more investors to buy into the company‟s stock. The ripple effect would be that the stock price of the company‟s shares would rise inadvertently.