The Relationship between Dividend Payout Fakhruddin Sunelwala and Firm Performance: A study of Automobile Companies Operating in India

Dividend policy is basically concerned with deciding to pay dividend in cash now, or to pay increased dividends at a later stage or distribution of profit in the form of bonus shares. Dividend payment is an important consideration used by present as well as prospective shareholders in valuing the worth of the share. This paper gives an insight of various dividend models like WALTER'S MODEL, GORDON'S MODEL & MODIGLIANI AND MILLER APPROACH. This research paper is an effort to find out the impact of firm performance that is net income or profit on dividend payout policy of the selected automobile companies by using multiple regression technique. The results of the regression analysis showed that up to 46 % (R-Square) of the Dividend Payout Ratio was affected by Return on Capital employed (ROCE) and Return on net worth (RONW).