Dividend Policy as a Strategic Driver of Shareholders’ Wealth Creation in Nigerian Quoted Banks

This study examined the impact of dividend policy on shareholders’ wealth creation in selected Nigerian quoted deposit money banks. The specific objective was to assess the effects of dividend per share, retained earnings ratio, dividend yield, and dividend coverage ratio on market price per share. An ex-post facto research design was adopted. A sample size of eight banks was selected. Secondary data were sourced from the banks’ annual reports over 17 years (2003–2019). Panel least squares regression was used to test the hypotheses. The findings revealed that retained earnings ratio and dividend yield positively and significantly impact shareholders’ wealth (b = 0.037064; p-value = 0.0003), whereas dividend per share and dividend coverage ratio are negative and insignificant at 5% significance level. The study concluded that dividend policy significantly affects shareholders’ wealth creation in Nigerian deposit money banks, supporting the Dividend Relevancy Theory and informing investment and managerial decisions. Hence, a constant dividend decision should be maintained in deposit money banks. The management of the banks should encourage regular payment of dividends to shareholders. This will attract potential investors and help to generate capital for the bank through the sale of shares. Therefore, it is advised that managers maintain a stable and consistent dividend policy, ensuring regular dividend payments to support investor confidence and potentially attract new capital.