The Effects of Dividends on Stock Prices in Pakistan

This paper tests the effect of the change in the dividends on stock price behavior. The sample population for this study comprises of four companies from different industries. These companies are Hub co, Lucky Cement, Honda Atlas and Nishat Mills. The research is conducted by gathering five year data (2004 to 2009) of related firms regarding their dividend payments and stock prices. The Time series graph and pivot graphs are plotted on data. The time series graph of stock prices of lucky Cement, Atlas Honda and Nishat Mills show variability of stock prices. Time series graph of dividend per share goes against the stock prices trend. Pivot Chart shows the comparison of stock prices and dividend per share of individual company. The findings indicate that the stock prices of all sample companies change with the change in dividends per share. The correlation results show that there is strong positive or negative relationship has been found between stock prices and dividends per share. It is evident that most of the stock prices have negative correlation with the dividend per share