Analysis of Dividend Policy: Impact of Profitability

Shareholders are owner of the company and expect to get reward for their investment. The management must satisfy the shareholders by offering them a fair return on their investment in the form of dividend. To distribute the dividend is the foremost duty of the management. This decision is connected with liquidity and profitability of the unit. The purpose of this paper is to analyse the dividend policy and want to know the impact of profitability on dividend payout of companies. The study has been made by considering top three listed companies from information and technology sector during the period from 2009 to 2014.Simple regression model has been used to know the effect of profitability on dividend payout.The study revealed that profitability has no impact on dividend payout. The company can declare dividend out of the reserves also.