Influence of Dividend Determinants on Stock Returns: Evidence from Nifty 50 Companies in India

Abstract

This study examines the impact of dividend determinants on stock returns of companies listed in the Nifty 50. The research aims to identify the key financial factors influencing stock returns using panel data from 2015–2016 to 2024–2025. The study employs various econometric techniques including descriptive statistics, correlation analysis, heteroskedasticity test, Breusch–Godfrey serial correlation test, panel unit root test, Kao residual cointegration test, Granger causality test, Hausman test, and panel data regression model. The Hausman test indicates that the fixed effect model is appropriate for the analysis. The empirical results reveal that firm size (SIZE), Return on Assets (ROA), Return on Equity (ROE), Price to Earnings Ratio (PE), Price to Book Value (PB), Dividend Yield (DY), and Earnings Per Share (EPS) have a positive and significant relationship with stock returns. In contrast, Dividend Payout Ratio (DP) and Dividend Per Share (DPS) show a negative and statistically insignificant relationship. The findings highlight the importance of profitability, valuation, and earnings indicators in explaining stock return behavior.