International Journal for Tourism and Technology (IJTT)
This study investigated the effect of dividend policy on financial performance of listed oil and Gas Companies in Nigeria. The study sought to ascertain the effect of dividend payout on return on investment, determine the effect of dividend yield on return on investment and ascertain the effect of dividend per share on return on investment of of listed Oil and Gas Companies in Nigeria. The study employed an ex-post facto research design. The population of the study was ten (10) listed oil and gas companies in the Nigerian Exchange Group were sampled to five (5) using purposive sampling technique. The data used in this study were sourced from annual reports and statement of accounts of the selected firms between 2014 and 2023. The method of data analysis was descriptive statistic, unit root, Husman Test and multiple regression of Panel Least Square (PLS) with the help of E-view 12. The study Findings showed that there is an insignificant effect of dividend payout on return on investment, there is an insignificant effect of dividend yield on return on investment, there is an insignificant effect of dividend per share on return on investment of listed oil and gas companies in Nigeria. Based on the findings, the study concludes that there is an insignificant effect of dividend policy on financial performance of listed oil and companies in Nigeria under the period of study between 2014 and 2023. It was suggested amongst others that the management of oil and gas companies should make it a priority to decrease the amount of dividends paid out to their customers’ stocks in order to prevent decline in their overall financial performance. This is necessary due to the fact that there is a negative effect of dividends paid out per share on return on investment.
Companies listed in Nigerian Exchange Group pay little or no dividend policy due to high growth opportunities, investment opportunities, low profits and huge debt financing. Oil and gas companies are faced by pipeline vandalization thus lead to inadequate maintenance of oil tank installation which leads to obsolescent, wear and tear thus requiring replacement. In the global world there is huge competition thus firms in oil and gas sector are suffering from losses due high production cost. Oil and gas companies are also suffering from foreign exchange losses caused by depreciation of Nigerian shillings and low revenues due to imports of petroleum product. According Gladys and Gachunga (2015), many companies are undergoing financial hardship and even bankruptcy due to wrong capital budgeting decisions being made Capital budgeting requires huge capital outlay, long term implication and high risk. Companies are facing from high taxes when they decide to pay dividend than opting to
retain the funds for investment thus lead to capital gains. High dividend payout is leading to lower retention of funds, low growth opportunity and lower liquidity. This problem is affecting investors, management and public. Another problem of dividend policy is the long standing debate in the world of finance as to whether dividend policy affects the value of a company or not. The pioneer arguments are that of Litner (1956) who proposed the Bird in hand theory. He argued that investors are risk averse and will prefer to pay higher premiums for companies that pay dividends hence companies that pay dividends will have a higher value in terms of share price than those that do not pay dividends. An opposing view propounded by Miller and Modigliani (1961) who argued that payment of dividend is not relevant. According to this argument the investors in need of cash can always sale their stock for cash, hence, dividend payments does not matter and investors are not willing to pay higher premiums for companies that pay dividends. A lot of theories have been developed in this area but they all
fall under either Litner’s Bird in hand theory or Miller and Modigliani’s dividend irrelevance theory.
Dividend Payout, Dividend Yield, Dividend Per Share