Determinants of dividends levels by co-operative societies. A study of savings and credit co-operative societies in Embu District
Mbiti, Josphat Njeru
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In theory, the objectives of a dividend policy is to maximize shareholder's return so that the value of the investment is maximized. Shareholder's return consist of two components namely dividends and capital gains. Dividend policy has a direct influence on these two components of return (Pandey 2006). It is clear that firms give dividends to their shareholders but differ in the levels of dividends given. It has also been noted that SACCOs do give dividends to their members. However the levels of dividends given differ. This research project provided an insight into the factors that determine levels of dividends given by co-operative societies. The paper focused on how SACCOs distribute dividends to their members. It's important to note that retained earnings are a source of finance in any given organization. It is also worth remembering that shareholders require return from their investments. Due to this, a need to find the factors that determine levels of dividends given was a major driving force in this research. In analyzing the dividend decision of SACCOs, this research project incorporated such parameters as earnings per share, dividends per share, after tax profits, retained earnings among others with the aim of establishing a consistency of their dividend decisions. Further, the paper recognized that management should come up with a policy that balances between need for future development of the firm and at the same time maximize shareholders wealth. This then implies that dividend decisions should not be taken in isolation from other decisions of the firm.