Nigerian Journal of Banking and Financial Issues (NJBFI)

DETERMINANT OF DIVIDEND POLICY IN THE NIGERIAN MANUFACTURING SECTOR

Abstract

Dividend policy remains a central issue in corporate finance, particularly in emerging markets characterized by financial and macroeconomic constraints. This study examines the determinants of dividend policy among listed Fast-Moving Consumer Goods (FMCG) firms in Nigeria over the period 2015–2024. Adopting a quantitative ex post facto design, the study employs static panel data techniques, specifically fixed and random effects models. Secondary data are sourced from firms’ annual reports and the Central Bank of Nigeria Statistical Bulletin, while the Hausman test supports the fixed effects estimator. The results reveal that profitability exerts a positive and statistically significant effect on dividend payout (β = 2.614, p = 0.000), indicating that earnings capacity is a key driver of dividend decisions. Exchange rate depreciation negatively and significantly affects dividend payout (β = −0.0004, p = 0.041), while inflation shows a negative but weakly significant effect (β = −0.017, p = 0.086). Other firm-specific variables leverage, liquidity, firm size, growth opportunities, and lending rate are statistically insignificant. The findings conclude that dividend policy in the sector is largely influenced by profitability and macroeconomic stability. The study recommends sustainable earnings strategies and improved exchange rate and inflation management to enhance dividend stability.