DIVIDEND POLICY AND FINANCIAL PERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA

This study examines the relationship between dividend policy and the financial performance of deposit money banks in Nigeria. Dividend policy remains a critical financial decision that influences investors’ confidence and the overall valuation of firms, particularly in the banking sector. The study adopts an ex-post facto research design and utilizes secondary data obtained from the annual reports and financial statements of selected deposit money banks listed on the Nigerian Exchange Group over a specified period.Key variables considered include dividend payout ratio, dividend yield, and retention ratio as proxies for dividend policy, while financial performance is measured using indicators such as return on assets (ROA), return on equity (ROE), and earnings per share (EPS). The data are analyzed using descriptive statistics, correlation analysis, and multiple regression techniques to determine the nature and strength of the relationship between dividend policy and bank performance. The findings reveal that dividend payout has a significant positive effect on the financial performance of deposit money banks, suggesting that consistent dividend payments enhance investor confidence and market value. However, retention ratio shows a mixed effect, indicating the need for banks to strike a balance between profit distribution and reinvestment for growth. The study concludes that an optimal dividend policy is essential for improving the financial performance and sustainability of deposit money banks in Nigeria. It recommends that bank management should adopt a stable and well-structured dividend policy that aligns with profitability, liquidity position, and long-term growth objectives