EFFECT OF DIVIDEND PAYOUT ON FINANCIAL PERFORMANCE OF QUOTED DEPOSIT MONEY BANKS IN NIGERIA

In recent times, Nigerian banks payout dividends to their shareholders when they did not have enough profits to do so (stable dividend). They did that to encourage potential investors that they were doing well. This had degenerated to great problem that most of these banks had to merge or acquire by other banks. This study provided empirical evidence on the effect of dividend payout on stock prices andfuture earnings growth of quoted Deposit Money Banks in Nigeria. The study adopted descriptive research design using Ordinary Least Square Method of Regression on cross sectional time senes data collected from the annual reports of the sampled quoted bank for the period spanning through 2001-2013. The findings of the study revealed positive but insignificant effect of dividend payout on stock prices and one year future earnings growth of listed deposit money banks in Nigeria. In the case of Dividend payout and three year earnings growth, a negative and insignificant relationship is revealed. The major finding is that dividend given alone cannot increase the stock price and future earnings. Thus, the study concluded that, payment of more dividends has no significant influence on stock prices andf uture earnings growth of listed banks in Nigeria. Therefore, retaining dividends forf urther investment has ag reater effect on stock prices and future earnings growth in Nigeria. This inspired the study recommendation for given priority to dividend policy decisions in corporate governance in Nigeria among others.