Dividend Policy and Corporate Profitability Econometric Analysis of Listed Manufacturing Firms in Sri Lanka

The issue of dividend policy is a very important one in the current business environment. Dividend policy is the regulations and guidelines that a company uses to decide to make dividend payments to shareholders. The objective of the study is to find out the impact of dividend policy on corporate profitability of Listed manufacturing companies in Sri Lanka. Dividend payout ratio and dividend yield are used to measure the dividend policy while ROE and ROA are used to measure the corporate profitability.Data for the study were extracted from annual report and accounts of 23 Listed manufacturing companies in Sri Lanka for the period of 2009 to 2014. These data were subjected to regression analysis, using E-view software and the findings indicate that; there is a significant impact of dividend policies of organizations on corporate profitability. It is recommended that Organizations should ensure that they have a good and robust dividend policy in place because it will enhance their profitability and attract investments to the organizations