Financial Determinants of Dividend Policy: Evidence from Top FMCG Companies in India
Author : Dr. Poojan Parikh
Abstract :
Dividend policy is a critical financial decision that reflects a firm’s approach toward shareholder wealth maximisation and internal financing. In capital-intensive and consumption-oriented sectors such as Fast Moving Consumer Goods (FMCG), dividend payout decisions are particularly significant due to stable demand patterns and relatively predictable earnings. The primary objective of the study is to analyse the impact of selected financial characteristics on dividend payout decisions. The analysis is based on the top five FMCG companies, selected on the basis of market capitalisation, and covers a period of five years from 2020–21 to 2024–25. The study relies on secondary data collected from published annual reports, corporate disclosures, and reliable financial databases.
To achieve the objective, the study employs descriptive statistics and multiple regression analysis to assess the relationship between dividend payout and key firm-level factors. The empirical results indicate that dividend payout decisions in Indian FMCG companies are significantly influenced by internal financial strength. Profitability and firm size emerge as important determinants of dividend policy, while other firm characteristics exhibit limited influence during the study period.
The study concludes that financially stable FMCG firms tend to follow consistent dividend payout practices, offering useful insights for corporate managers in designing dividend policies and for investors seeking stable dividend-paying stocks.
Keywords :
Dividend Policy, Dividend Payout, FMCG Sector, Financial Performance, India.
