Dividend Policies and Financial Drivers: A Study of Indian Blue-Chip Companies (2015–2021)

Abstract

This study investigates the dividend policies of select Indian blue-chip companies over the period 2015 to 2021, aiming to understand the patterns, determinants, and strategic implications of dividend distribution. Using a mixed-method approach anchored in panel regression analysis, the study evaluates the relationship between financial variables such as Earnings Per Share (EPS), Return on Equity (ROE), Net Income, and P/E Ratio with dividend decisions. Company-wise trends and comparative assessments are also conducted to highlight sectoral behaviors and firm-specific dividend strategies. The findings reveal that EPS significantly influences Dividend Per Share (DPS), reinforcing the traditional view of profit-driven dividend policy, while ROE emerges as a strong predictor of market valuation (P/E Ratio). Panel regression results reveal that EPS significantly affects DPS (p < 0.01), while ROE significantly predicts P/E Ratio (p < 0.01), underscoring the central role of profitability and capital efficiency in dividend and valuation dynamics. The study concludes that while profitability remains central, dividend policies are also shaped by regulatory frameworks, industry characteristics, and firm-specific reinvestment priorities.