Dividend Yield Research Articles

Election-day market reactions to tax proposals: Evidence from a close vote

We ask whether stock markets react to political leaders' intentions to tax shareholders immediately following their election. Our natural laboratory is the surprising outcome of the September 2021 Japanese Prime Ministerial election. Using an event study approach, we find firms that are vulnerable to a potential tax increase, such as those paying or receiving dividends, demonstrate lower stock returns compared to their counterparts. In contrast, our analysis does not show differences in stock returns between firms earning interest income and those that do not. Moreover, among high dividend yield firms, a striking contrast emerges: those with substantial individual ownership show a decline in stock returns, while those with significant foreign ownership exhibit an increase. These results highlight the targeted impact of shareholder taxation on domestic shareholders, distinguishing them from debt holders or foreign investors, right from Election Day.

Examining Volatility in Bank Stock Prices: A Comparative Exploration of Dividend Policies, Macroeconomic Influences, and Company-Specific Factors

This study aims to ascertain and compare factors influencing stock price volatility in terms of dividend policy, macroeconomic and company specific aspects for selected subset of listed banks in Bangladesh. Eleven years of secondary data (from 2011 to 2021) for fifteen commercial banks (representing 61.5% market capitalization of the banking sector) was acquired from diverse sources. The dependent variable chosen is stock price volatility, whereas the dividend policy is initially represented by dividend payout ratio (PRt & PRt-1), dividend yield (DYt & DYt-1). Several firm and country-specific macroeconomic indicators are used as control variables. A methodical approach followed by panel data analysis has been employed to identify a suitable model that can yield more accurate estimators. Consequently, some diagnostic tests are also performed to account for diagnosed problems: contemporaneous cross-sectional correlation, group-wise heteroskedasticity and autocorrelation; Driscoll-Kraay standard error regression model is finally applied. The study not only found significant negative impact of dividend payout ratio but also spotted a significant influence of inflation, EPS, and firm size on stock price volatility. Price volatility influenced by “No dividend policy” can be reinvestigated from the aspect of behavioral finance in the future. Furthermore, this study also sheds light on to what extent firm-specific and macroeconomic influence impact stock price volatility in Bangladesh's banking sector.

Analysis of the Mediating Effect of Macroeconomic Factors on the Relationship between Dividend Policy and Stock Return in Nairobi Securities Exchange in Kenya

Stock Indices are designed to gauge market performance and guide investors in making investment decisions, especially in stock portfolio mix and management. Dividend Policy is an important finance function; organizations need to decide how to distribute dividends and how much dividends to retain and be ploughed back into the business. Between 2009 and 2018, the Nairobi Securities Exchange depicted erratic performance in making investment decisions during the financial crisis and volatility of the securities exchange. This study, therefore, sought to investigate the mediating role of macroeconomic factors on the relationship between dividend policy and stock return in Nairobi Securities Exchange to help investors make decisions amidst the erratic performance of the burse. The study employed longitudinal times series study regression analysis and used structural equation modeling (SEM) to assess mediation relationships. Results revealed that macroeconomic factors mediate the relationship between dividend policy and stock return; interest rate fully mediates the relationship between dividend per share, payout ratio, and stock return (p=0.00) and partially mediates the relationship between dividend yield and stock return (P=0.00). Inflation fully mediates the relationship between dividend per share, payout ratio, and stock return (p=0.00) and partially mediates the relationship between dividend yield and stock return (p=0.00). Gross Domestic Product does not mediate the relationship between dividend yield, payout ratio, dividend per share, and stock return (p= 0.76), (p=0.91) and (p=0.90), respectively.

Return on assets, return on equity, earnings per share, dividend yield, and book-to-market ratio’s effects on stock return

This research intends to investigate the ability of Return on assets (ROA), return on equity (ROE), earnings per share (EPS), dividend yield (DY), and book-to-market ratio (BMR) on stock returns. Stock investment is one strategy for investors to channel their finances while boosting wealth due to the high return on equities earned. In this study, company information is represented by financial ratios, which play a significant role in guiding investors in identifying which companies have the potential to give the highest number of returns. With 164 total observations, this research used 56 companies that were part of the LQ45 index on the Indonesian Stock Exchange (IDX) in the 2019–2022 timeframe as a sample study with the aim to examine the effects of ROA, ROE, EPS, dividend yield, and book-to-market ratio on stock return. Using STATA 14.0 software, double linear regression analysis is used in the hypothesis test. The results of this research, as proven by the regression analysis, are as follows: (1) the book-to-market ratio negatively affects stock return; and (2) ROA, ROE, EPS, and dividend yield have no bearing on stock return. This study emphasizes the value of diversifying investment strategies and avoiding a narrow range of financial ratios when choosing which stocks to buy. Investors should evaluate general business conditions and take a wider range of issues into account.

Analysis of Representative Stocks in the UK Supermarket Industry

This essay provides a comprehensive analysis of three major supermarket stocks: Marks & Spencer (M&S), Sainsbury's, and Tesco. The analysis focuses on evaluating the risks, profitability, market ratios, and suitability for different types of investors. M&S exhibits the highest level of risk, while Tesco and Sainsbury's appear to be more stable. M&S is the most profitable stock, followed by Tesco and Sainsbury's. In terms of market ratios, M&S shows potential undervaluation and growth opportunities, Sainsbury's offers a high dividend yield, and both Sainsbury's and Tesco display positive momentum. The preferred stock choices for different types of investors are Sainsbury's for value investors, M&S for growth investors, Tesco for index investors, and Sainsbury's for income investors. These results are used for different investors to analyze and decide which company they will invest to earn more profit in its operation.

PENGARUH KEBIJAKAN DIVIDEN, LEVERAGE, DAN FIRM SIZE TERHADAP VOLATILITAS HARGA SAHAM

The purpose of this study was to determine and analyze the effect of dividend policy, Leverage, and Firm Size on stock price volatility. The research method used was purposive sampling with a total sample of 18 companies listed on the LQ-45 index listed on the Indonesia Stock Exchange (IDX). This research was conducted using secondary data on observations in 2018-2020. Data processing in this research using Microsoft Office 365 software and IBM SPSS Statistics V25.0. The results showed that Dividend Yield, Dividend Payout Ratio and Firm Size did not have a significant effect on Stock Price Volatility, while Leverage had a significant and negative effect on Stock Price Volatility. The implication of this research is the need to know what are the factors that can affect the stock price volatility which will give a good or bad signal to investors in carrying out their investment activities.

Impact of dividend policy on corporate social responsibility: the role of board governance mechanism

Purpose This study aims to investigate the impact of dividend policy on a firm’s participation in corporate social responsibility (CSR)-related activities in the context of Pakistani firms. Furthermore, the role of the board governance mechanism in dividend policy-CSR is investigated. Design/methodology/approach The study’s sample consists of 115 nonfinancial Pakistan Stock Exchange-listed firms from 2010 to 2021. A multidimensional financial method is used to assess the firm’s CSR engagement, and dividend policy is assessed using the dividend payout ratio and dividend yield. The authors used the fixed effect model and the random effect model to fulfill the study’s objectives. Furthermore, the system-generalized method of moment estimation technique is used to test the robustness of the result. In addition, the authors perform reverse causality analysis and investigate the effect of financial constraints on the dividend policy–CSR relationship. Findings The authors find that dividend policy has a significant positive impact on CSR. The authors also find that dividend policy is significantly positively associated with components of CSR, i.e. donation, employee welfare and research and development. Furthermore, the authors find that the board governance mechanism strengthens this positive relationship between dividend policy and CSR. Practical implications The government and authorities must mandate or at least encourage enterprises to pay dividends as doing so not only keeps shareholders happy but also encourages firms to make CSR initiatives to balance stakeholders. Furthermore, the regulator should take steps to strengthen the board governance structure as it strengthens the positive dividend policy–CSR relationship. Originality/value Although little previous research has focused on the CSR-dividend policy link, the authors believe that this is the first study to look at the influence of dividend policy on CSR and the moderating impact of board governance mechanisms in an emerging country, namely, Pakistan.

Financial determinants of environmental, social and governance performance: Empirical evidence from India

The present study aims to examine the firm-level financial determinants of ESG performance. It elucidates what financial resources it takes to enable the integration of ESG practices and improve a firm’s ESG scores, based on a sample of 94 Indian firms listed on the National Stock Exchange of India between 2015 and 2020. Econometrically, the study employs fixed effects and random effects panel data models as an appropriate methodology. The findings show that firm size, asset intangibility, analyst coverage, and operating cash flow influence firms’ ESG scores positively, whereas leveraging and strategic holding impact them negatively. In addition to the mentioned variables, cash holdings positively influence firms’ environmental, social, and governance scores. While dividend yield does not contribute to combined ESG and governance scores, it has a positive impact on a firm’s environmental and social scores. This is the first study examining the determinants of firm-level ESG performance in an emerging market. Results endorse the interaction of legitimacy theory and slack resource theory in determining a firm’s ESG performance. AcknowledgementThe infrastructural support provided by FORE School of Management, New Delhi, India in completing this paper is gratefully acknowledged.

An Empirical Assessment of Factors Impacting Stock Prices of Nepalese Commercial Banks

This study examines the impact of various financial variables on the pricing of commercial banks in Nepal. Key financial metrics analyzed include earnings per share, dividend yield, price-toearnings (P/E) ratio, earnings yield, book value per share, money supply, market-to-book value ratio, and stock return. The research highlights the importance of market financial ratios in the investment decisions of Nepalese investors. Using data from 10 out of 20 commercial banks listed on the Nepal Stock Exchange, spanning 110 yearly observations from fiscal years 2012/13 to 2022/23, multiple regression models were employed to determine the relationships between these factors. The findings reveal that earnings per share, dividend yield, P/E ratio, book value per share, money supply, market-to-book value ratio, and stock return are significantly positively correlated with the prices of commercial banks. Conversely, earnings yield shows a negative correlation. Despite the strong preference for price and profitability metrics, the study's limited sample size and focus on commercial banks may affect the generalizability of the results. This research provides critical insights, particularly emphasizing the importance of earnings per share, dividend yield, P/E ratio, and book value per share in guiding investors' financial decisions in Nepal. The findings are anticipated to benefit investors, scholars, policymakers, and other stakeholders by enhancing their understanding of the factors influencing stock prices in the Nepalese banking sector.

Exploring the impact of input variables on option value: a study using experimental design and analysis techniques

The Black Scholes Model (BSM), a well-known approach for determining the fair value of options, has a long history. The price of the underlying asset, the strike price, volatility, time period, interest rates, and dividend yields are several of the input variables that have an impact on option pricing. This study intends to investigate the effects of these variables on option values. Taguchi’s methodology of design of the experiment is used for the experimental setup and to optimize the factors for option values. Taguchi method L27 design of experiment (DOE), analysis of variance (ANOVA), regression analysis, and analysis of means (ANOM) were used to investigate the effects of these input parameters on option values. MINITAB 18 software is used to carry out the analysis. The factors, in order of their significance from highest to lowest, were identified as: strike price, time period, interest rate, underlying asset price, volatility and dividend concerning to call option value for the given dataset. This technique can be used by traders to determine how various factors impact option values. The proportion contribution of these factors to the call values is also quantified using ANOVA.

Analyzing the American portfolio options within the CEV model incorporating dividend yield by the Lie symmetry approach

Analyzing the American portfolio options within the CEV model incorporating dividend yield by the Lie symmetry approach

Impact of the Free Float Ratio on Dividend Yield and Capital Decisions

Impact of the Free Float Ratio on Dividend Yield and Capital Decisions

Foreign Investments and Stock Market: Evidence From Palestine

Purpose: This study aims to examine the association between the different forms of inbound foreign investments and the Palestine Exchange (PEX) index to shed light on the nature of that impact.
 
 Theoretical Framework: Several academic studies have examined stock market index factors. Chen, Roll, and Ross's (1986) seminal study on macroeconomic conditions and U.S. stock returns provides an example. Interest rate, inflation, industrial production, risk premium movements, and dividend yield positively explain expected stock return. Abusharbeh and Karim (2016) found that interest and consumer price index positively affect banking and investment firm profits on The Palestine Exchange (PEX). Shahbaz (2013) examined how foreign direct investment affects Pakistan's stock market. Results supported foreign direct investment's stock market complementarity.
 
 Design/Methodology/Approach: The market index and panel quarterly data for inward foreign investments are used in this study. From 2009 to 2022, end-of-quarter data were collected on total inward foreign investments, their sub-components (direct investments, stock portfolio investments, and currency and deposits in Palestine), and the market index (Al-Quds index) closing value. Fifty-six observations were gathered.
 
 Findings: The study found that the overall model integrating all three types of inward foreign investments significantly explains the market index. Foreign portfolio investments (FPI) are significantly associated with the stock market index. However, the results showed that inward foreign direct investments (FDI) and foreign deposits and currency investments (FCI) have no significant impact on the stock market index, indicating that they do not complement or substitute each other.
 
 Research, Practical & Social Implications: This study can help the stock market, regulators, and policymakers create incentives and regulations to attract different forms of inward foreign investments. It also examines why foreign direct investments (FDI) and foreign deposits and currency investments do not complement or substitute stock market development.
 
 Originality/Value: This study provides empirical evidence on the impact of the different forms of foreign investment in Palestine on the stock market. Further research is recommended to explore additional variables that might be significant, such as market capitalization and market volume.

Dividend policy and shareholders’ wealth. A comparative analysis of Shariah-compliant and noncompliant nonfinancial firms in Pakistan

Purpose The purpose of this study is to comparatively analyze the effect of dividend policy on shareholders’ wealth in Shariah-compliant (SC) and noncompliant (NC) nonfinancial firms in Pakistan. Design/methodology/approach All the nonfinancial firms listed on the Pakistan stock exchange have been taken as a sample for 2016–2021. The Karachi Meezan index screening criteria were applied to screen SC firms. Based on the BPLM and Hausman test results, the authors used the fixed-effect and pooled OLS model for SC and NC firms, respectively. The F-test was used to compare the effect of each dividend policy variable on shareholders’ wealth for both firm types. Findings The findings reveal that the dividend policy does affect the shareholders’ wealth in both firm types. Dividend per share (DPS), dividend yield (DY) and earnings per share significantly affect the shareholders’ wealth in SC firms. For NC firms, the dividend payout, DPS and DY are critical. Moreover, the F-test results show that the DPS, DY and leverage effect on the shareholders’ wealth significantly differ for both firm types. Research limitations/implications This study fills the research gap in the Pakistani context specifically as well as globally by providing important insights into the relationship between a firm’s dividend policy and shareholders’ wealth for SC and NC firms. In addition, this study comprehensively compares the results for both firm types, which is also lacking in the existing literature. Because this study is based in Pakistan, the generalizability of the results would be limited. Practical implications The findings of this study are helpful for the management of SC and NC firms in devising their dividend policies that can maximize their shareholders’ wealth. This study also provides guidance and knowledge to investors in choosing companies for their investments that can maximize their wealth. Originality/value To the best of the authors’ knowledge, this is the first study that analyzes the relationship between dividend policy and shareholders’ wealth for SC firms in Pakistan. It is also the first study that comprehensively compares the dividend policy relationship with shareholders’ wealth for SC and NC firms. In addition, using the F-test for joint hypotheses to compare the specific effect of each dividend policy variable is a methodological contribution of the study.

Income illusions: challenging the high yield stock narrative

While stocks with high dividends have historically outperformed those with low dividends, we show that the difference can be completely explained by a set of well-known factors including value, quality and defensive. Applying a dividend filter to a portfolio of strategies having high exposure to these factors yields sub-optimal results. To test whether incorporating dividend yields can improve the performance of long-only factor portfolios, we construct a set of dividend-favored long-only factor portfolios with a heuristic rebalance algorithm and find that their after-tax net returns are lower than the dividend-agnostic counterparts. Collectively our results indicate that long-only active investors are better off loading directly on value, quality and defensive factors than purposely tilting their portfolios toward high-dividend stocks.

Stock Investment Value Analysis Based on Sports Brand Section

This article briefly analyzes the risks, profitability, and market ratios of the stocks of three sportswear brands and gives investment advice for different types of investors. Lululemon, Nike, and VF Corporation are three sports industry brands. First, none of the three stocks are value stocks. Because of its better upward momentum, Lululemon would be a satisfying choice for momentum investors. Due to its insider buying of more than 4% and its highest ROA among them, Lululemon is also the best choice for insider buying and ratio analysis investors. Due to its PEG ratio of less than 1, dividend yield greater than 6, and DCF valuation higher than the current stock price, VF Corporation is popular with PEG, income, and DCF investors. NIKE has a stock buyback of more than 1B USD, which is the highest among the 3 stocks, so stock buyback investors are more inclined to invest in it. Lululemon and NIKE have market caps higher than 15B USD, so they have less size risk, which makes them more favored by index investors.

Optimization Study of the Improvement on DDM Model Based on Poly Union Group Corporation

With the global economic develops, stock market has aroused the attention of investors, which enables them to invest capital in it. However, the DDM that investors use has various disadvantages, which have been misleading them to get wrong conclusions. Thus, this paper will have further analysis and research on the weakness of the DDM and propose elaborate improvement. The paper uses the GGM model to value the stock price based on the actual dividend paid by the company and for the simplicity of calculation. The research shows that the DDM ignores the growth of the company and the risk factor. Furthermore, the DDM isn’t suitable for stocks whose growth of dividend is higher than the discount rate. The PEG model can give accurate valuations for stocks that have zero dividend yields or very trivial ones. In general, the PEG model can improve the DDM model. But still, the PEG model doesn’t take the cash amount on the balance sheet into account. Company with a certain amount of cashflow might be more valuable for investors. In the future, something should be added to modify the PEG model.

LONG TERM INVESTMENT: CRITICALLY EVALUATING THE SPECULATIVE NATURE OF INVESTING IN HIGH PE RATIO STOCKS

Price to Earnings ratio is one of the most significant and top used financial metric when it comes to fundamental analysis and investment decision making. Even the market moves based on the expected PE ratio and adjusts itself from time to time accordingly. This study aims at critical evaluation by comparing a stock purchase at a historic date at a higher PE multiple with a current date and calculating returns on both stock price levels as well as dividend yield level over the entire period in absolute terms. It wants to highlight that a purchase at higher PE falls out of the definition of investing and should be categorized and treated as speculative for very clear reasons that are critically evaluated in this study. It is noticed that unless the company grows top line and bottom-line exponentially, a stock purchase at higher PE delivers very dismal dividend yield if any and mostly negative return on account of stock price depreciation rather than appreciation. Hence, such purchase can be said to be speculative as it relies solely on momentum stock price rise for gains.

The binomial option pricing model: The trouble with dividends

We identify a problem in the widely used binomial option pricing model when it is used to value options on an asset paying continuous dividends. It does not value pairs of European spot and futures options consistently even though they are theoretically equivalent. The inconsistency arises from the way dividend yield is incorporated into the jumps and probabilities. In addition, the model also has the tendency to undervalue American options due to suboptimal early exercise decisions. While the lingering effect of this problem diminishes asymptotically, it is nonetheless a concern for someone just beginning to learn the model or in applications where the use of a sufficiently large binomial tree is not practical or economical. We propose a simple modification to solve the problem and demonstrate the effectiveness of the solution.

Sensitivity Analysis Based on Portfolio Option Models Using Tesla and Nio as Examples

The electric vehicle (EV) industry is undergoing a significant transformation, driven by environmental concerns, advancements in battery technology, and changing consumer preferences. Companies like Tesla and China's NIO are at the forefront of this revolution, showcasing the global potential of EVs. This study undertook a sensitivity analysis of these two leading EV manufacturers, Tesla and NIO, to understand the dynamics of their stock prices and implications for investment strategies. Data was meticulously collected from various financial databases to capture daily stock prices, which were then used to compute monthly returns. The study also delved into options, focusing on the strike prices and volatility of Tesla and NIO options. Using a combination of stock prices, strike prices, and volatility, the intrinsic and time value of these options were analyzed. The research employed a composite option model to describe the price variation of an option, considering factors like asset price volatility, risk-free rate, and dividend yield. The findings revealed that stock prices and option prices exhibited certain sensitivities to market variables. For instance, Tesla's option prices showed an upward trend with rising stock prices, while NIO's option prices displayed varied responses to stock price changes. The study underscores the importance of understanding these sensitivities for informed investment decisions in the evolving EV market.