Dividend and Performance of Savings and Credit Co-operative Societies in Uasin Gishu County, Kenya

Abstract

Dividend in relation to SACCO’s performance has been found to attract a lot of controversies with the rate being dismally lower in developing countries than in developed countries. The objective of this study was to determine the relationship between dividend and performance of SACCOs in Uasin Gishu County, Kenya. Primary data was sought from the SACCO’s audited financial reports. The population of interest was the 120 registered SACCOs operating within Uasin Gishu County that was purposively sampled at 10% for dividend paying SACCOs to arrive at the workable sample size of 12 SACCOs. The study adopted quantitative research design to give the desired information relevant for this study. Statistical package for social science(SPSS) and STATA Version 12 of computer software were used to run multiple regression analysis in order to arrive at the relevant statistical tests for inference .The study findings were found that the calculated T values on net income and dividend payout ratio showed that there is a positive relationship between dividend and performance of SACCOs while that for the amount of dividend paid, the total value of and the percentage of dividend paid showed an inverse relationship at 5% level of significance. The recommendations drawn after this study was that the decision on whether to payout dividends or not should not only be vested on the SACCOs management but be a subject to be debated among all SACCO members. As they strive to achieve growth, SACCOs are advised to develop an investment policy that would guide them on how much is to be retained as well as dividend payout policy that would guide how much to be paid and when to be paid. The conclusions was drawn based on the coefficient of determination (R2) that was significantly too small (35%).This means that there are other factors apart from net income, amount of dividends paid, total values of Assets and dividend payout ratio that affects the performance of SACCOs.