Abstract:
This study sought to examine the relationship between dividend payout and share price
performance in Tanzanian Commercial Banks. The specific objectives of this study
were to determine the relationship between dividend yield, cash dividend payout ratio
and stock dividends with share price performance. This study employed dividend
irrelevance theory and signaling theory. The study adopts a positivism research
philosophy and a quantitative approach, utilizing a causal research design. The
research focuses on commercial banks listed on the Dar es Salaam Stock Exchange
(DSE), with a target population of seven banks selected through purposive sampling.
Data is collected through secondary sources via documentary reviews. For data
analysis, both descriptive and inferential statistics are employed using STATA
software. Descriptive statistics include mean and strand deviation, while inferential
statistics involve correlation analysis and Hausman test regression. The study unveiled
a moderate positive correlation between dividend yield and share price performance.
Similarly, the findings of this study revealed a moderate positive between the cash
dividend payout ratio and share price performance. Also this study found a weak
negative between stock dividends and share price performance. This study
recommends that Tanzanian commercial banks focus on optimizing dividend yields to
enhance share price performance, as a positive relationship between dividend yield
and share price has been observed. It also suggests that banks carefully manage their
cash dividend payout ratios, as a higher payout ratio could signal financial stability
and positively impact share prices. Additionally, the study advises reconsidering the
reliance on stock dividends due to the weak negative correlation with share price
performance. Future research could examine the influence of technological
advancements, such as mobile banking, fintech, and blockchain, on dividend policy
and payout decisions in Tanzanian commercial banks.
