Investigating the Impact of Dividend Policy o...

Investigating the Impact of Dividend Policy on Stock Prices in the FMCG Sector With Reference To India

Author Name : Dr. K. V. Manju, Sahaana Shree K B, Rishiprasath A

DOI: https://doi.org/10.56025/IJARESM.2025.1304251290

ABSTRACT The study examines the relationship between dividend policy and stock prices in India's Fast-Moving Consumer Goods (FMCG) sector for a period of ten years (2015–2024). Using the latest yearly reports from ten leading FMCGs as secondary source data, the seminal variable variables analysed consists of Dividend Per Share (DPS), Dividend Yield, Earnings Per Share (EPS), Profit After Tax (PAT), Retention Ratio, Return on Equity (ROE). Descriptive statistics showed significant variance across these financial metrics, with PAT, DPS, EPS and share price demonstrating significantly right-skewed distributions indicating diverse strategies and performances in the sector. The correlation analysis showed positive relationships between share price and DPS (0.442), EPS (0.553), and ROE (0.531) while Dividend Yield and Retention Ratio showed negative relationships with share price. The regression analysis also revealed that Dividend Yield, EPS, and ROE have statistically significant predictions for share price with an R-squared of 0.639, indicating that roughly 63.9% of the variation in share price can be accounted for by the model. This paper concludes that dividend policy and profitability metrics have a significant impact in determining stock prices in Indian FMCG sector, thus forming insightful conclusions for investors and corporate managers to take better investment decisions.