Discussion/Conclusion of dividend policy affect corporate earnings and profitability

        If all the above discussion is summarized than it evident 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. Through evaluating the relevant literature it can be said that a lot of researchers have concluded that the dividend policy and the profitability of the organization have relationship with each other. The dividend policy do effect the profitability of the corporation. The studies have shown that through dividend policy one can evaluate the future profitability of the organization. In various studies it has been identified that the organizations change their dividend so that they can signal increase in the earnings of the corporation.

        Sometimes high amount of dividend decreases the profitability because a significant portion of the profit is paid to the investors as dividend. Through changes I dividend one can determine increase or decrease in the future profitability. When the amount of dividend increases it means that the corporation is generating significant amount of profit and in future the profitability of the corporation will increase. When the dividend amount decreases the investors think that the operations of the corporation starts facing issues which become the reason in decreased profitability. The first thing that comes in the mind of the investor when dividend decreases is that the corporation profitability has decreased.

        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.