Dividend Policy and Share Price: Empirical Investigation of Zenith Bank Plc, Nigeria

Dividend decision is one of the major decisions taken by the firm which no doubt influences the decision of both local and foreign investors. Investors in developing countries like Nigeria believe that dividend paid to the shareholders is one of the best indicators of profitability market price of the corporate share. This study, therefore examines the impact of dividend policy on a share price with specific reference to Zenith bank Plc, Nigeria. The study relied mainly on the secondary data gotten from the audited annual financial reports and accounts of Zenith bank Plc from 2007-2016. The market value of the share, earnings and the dividend paid in 2007 to 2016 were considered. Descriptive statistics were used to describe the variables while Correlation Analysis and Ordinary Linear Square (OLS) were used to examine the relationship and effect between the dependent and independent variables respectively. Results show that dividend yield (β = -242.032; t = -1.640); earnings yield (β = -.116.549; t = -1.478) payout ratio (β = -.61.484; t = -1.425) have negative impact but not significant on share price of Zenith bank. This implies that dividend policy measured by dividend yield, earnings yield and payout ratios are a weak predictor of the share price of Zenith bank. The study, therefore, recommends that management of Zenith bank should endeavour to strict adhere to the interest of shareholders in choosing dividend policies that will maximize shareholders' value. More also, management of Zenith bank should follow a dividend payout policy that will constantly involve paying dividends annually.