Data Analysis of dividend policy affect corporate earnings and profitability

    In order to investigate the effect of dividend policy over the profitability and earnings of the organization the financials of the corporation are evaluated. The financial ratios of the organization are taken to analyze the impact of dividend policy on profitability.

        In the above table the profitability ratios of the corporation can be seen. The profitability ratios such as ROE & ROA are showing a decline after 2013 with a recovery in the year 2017. The profitability ratios of the corporation such as ROE is taken to investigate whether the dividend policy of the organization has any impact on the corporately profitability or not (Morningstar 2018).

        The above table describes the revenues and dividend payout ratio of the corporation. It can be seen that over the years the dividend payout ratio has increased significantly. In the year 2013 the dividend payout ratio (DPO) is 68.4 which increased up to 101.5 in the year 2016.

Application of Theories of dividend policy affect corporate earnings and profitability

        For analyzing the relationship between the Dividend policy and the profitability of the Kellogg Corporation the financial ratios of the Kellogg Corporation are taken. The Dividend pat out ratio determines the dividend policy of the corporation were as ROE indicates the profitability of the corporation. It can be seen that the profitability and dividend policy have significant relationship with each other. In the year the 2015 the corporation profitability starts increases which is reflected in the dividend policy of the corporation. The corporation has paid huge amount of dividend in 2015 which is an indicator that corporation profitability will increase in the future. Through the graph it can be seen that the profitability of the corporation increased after 2015 (Morningstar 2018).

Critical Analysis/Findings of dividend policy affect corporate earnings and profitability

        The findings of the study shows that the dividend payout ratio have significant relation with the profitability of the corporation. The dividend policies of the corporation changes when the organization estimate change in their profitability. Through analyzing the Data it can be seen that when the corporation pay huge amount of dividend the profitability of the corporation increases. It means that when the corporation generates profit it pay dividend to the investors.

        The findings of the study are consistence with the literature review because many studies have stated that there is relationship between dividend and profit. Through literature review it can be said that the dividend policies remain important for the corporations because they are related with the investors and their profitability. The investors invest in such corporations which provide significant amount of return on their investment & allow them to maximize their wealth. If the organization is going to provide low dividend to the shareholders than the corporation might face criticism from shareholders and in future it might face problems in generating funds through equity (Atrill 2014).

References of dividend policy affect corporate earnings and profitability

Atrill, Peter. 2014. Financial Management for Decision Makers . 7. Pearson Higher Ed.

Baker, H. Kent, and Rob Weigand. 2015. "Corporate dividend policy revisited ." 41 (2): 126-144.

DOIDGE, CRAIG, and ALEXANDER DYCK. 2015. "Taxes and Corporate Policies: Evidence from a Quasi Natural Experiment." 70: 45-89.

Higgins. 2007. Analysis for Financial Management. Tata McGraw-Hill Education.

HirinduKawshala, and KushaniPanditharathna. 2017. "The Effect of Dividend Policy on Corporate Profitability: An Empirical Study on Beverage, Food and Tobacco Industry in Sri Lanka ." 7 (8): 542-546.

Liu, Chinpiao, and An-Sing Chen. 2015. "Dofirms use dividend changes to signal future profitability?A simultaneous equation analysis." 37: 194-207.

Morningstar. 2018. Kellogg Co. https://www.morningstar.com/stocks/xnys/k/quote.html.

Nissim, Doron, and Amir Ziv. 2001. "Dividend Changes and Future Profitability ." 56: 2111-2133.