Relationship between Inflation and Dividend Payout for Companies Listed At the Nairobi Securities Exchange

Citation:
Elly OD, Hellen KW. "Relationship between Inflation and Dividend Payout for Companies Listed At the Nairobi Securities Exchange." International Journal of Education and Research. 2013;1(6):1-8.

Abstract:

Earlier studies conducted have a mixed opinion on the effect of inflation on dividend payout.
Due to the nominal increase in the volumes of money, which result from the increase in
inflation, at least for a short run, some studies have concluded that inflation has a positive
effect on dividend payout. However, in the long run, studies in general seem to show that the inflation rate and stock returns are negatively related. This study, which consider sa sample of all the firms that consistently paid dividend between the year 2002 to 2011 and were listed at
the Nairobi Security Exchange showed that , inflation rate has no impact on the dividend payout.
However, other variables considered, that is ,the spo tDollar exchange rate to Kenya Shilling
s, the Volumes of Money Supply and the T-Bill rate (91 day rate) show mixed result s. The study
reveals that, the exchange rate and the T-Bill rate have a positive correlation with dividend
payout, while volume of money supplied has no impact on the dividend payout.
Key Words:
Nairobi Securities Exchange (NSE), Dividend Payout, Inflation, Exchange Rate,Money Supply, T-Bill rate.

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