Dividend Payout Effects on Firm Performance in Nigerian Oil and Gas Sector

Abstract

To address the need for more answers regarding effects of dividend payout on firm performance of quoted oil and gas companies in Nigeria, this study set out to ascertain the effect of Dividend Payout Ratio (DPR) on Net Profit Margin of quoted oil and gas companies, to determine the effect of Dividend Payout Ratio (DPR) on the Return of Asset (ROA) of quoted oil and gas companies as well as to identify the effect of Dividend Payout Ratio (DPR) on the Return on Equity (ROE) of quoted oil and gas companies. Accordingly, Ratio Analyses (Dividend Payout Ratio and Profitability Ratio) were adopted as analytical tools for deciphering the relationship between variables in the financial statement of two oil and gas firms (Total Plc and Mobil Plc) to identify fundamental trends and relationships that often cannot be noted by individual inspection of components of the ratio. The research made use of secondary data obtained from financial reports of the companies. The study found that Dividend Payout Ratio had a negative and insignificant effect on firm performance of Mobil Plc and Total Plc in 2017 and 2018, while the results showed significant effect in 2015 and 2016 for Total Plc, and significant effect for Mobil Plc in 2015 but insignificant effect in 2016. Inclusively, the study concluded that payment of dividend and the payout ratio conveys to shareholders that the companies are profitable and financially strong and recommended that managers: devote time to as well as design dividend policies that will enhance financial performance and shareholders’ value; and reduce company total debts to increase financial performance of firms and shareholder value.