The Relationship Between Dividend Payout and Performance of Savings and Credit Co-operative Societies in Nairobi County

Abstract

The purpose of the study was to determine the relationship between dividend payout and firm performance among Sacco’s in Nairobi County Secondary data on financial performance from the sample of 179 Sacco’s was collected for the period 2010 till 2014. The study also used a questionnaire to collect primary data for purposes of answering the research question. The research question used in the study was: (i) what relationship exists between dividend payout and firm performance among Saccos in Nairobi County. The data was analyzed by using descriptive statistics as well as inferential statistics. Descriptive statistics was useful for coming up with an understanding of the data and thus helped in organizing and summarizing of the data while inferential statistics was to help in making of valid conclusions from the data. Correlation and regression analysis was used in order to find the degree of relationship and thus help in fulfilling the purpose of the study. The results of the relationship between dividends and firm performance showed that there exists a relationship between dividends and firm performance. There was a positive relation between net profit after tax and total assets, revenues and dividends as shown by the positive coefficients. The results also showed that the extent of the relationship between dividends and firm performance was significant. This in fact shows that dividends have a significant influence on firm performance as do revenues and total assets. The study recommends that firms should pay dividends since they are relevant and they affect the value of the firm. In addition dividends are a signal to investors and the market of how the firm is performing