Dividend Policy of Life Insurance Companies in Nepal

Abstract

This study examines the dividend policy of life insurance companies in Nepal for ten year periods (2012/13-2021/22). This study has employed descriptive and causal research designs to analyze with issues associated with the factors of dividend policy. This study used descriptive statistic, correlation and multiple regression analysis. This study shows that NLIC has the highest dividend indicates that earning of this company seem to be highest and regular on offering dividend to shareholders. Having a growing dividend per share can be a sign that the company’s management believes that the growth can be sustained. The correlation analysis shows that return on assets has significant positive relation with dividend. Likewise, there is insignificant positive correlation between liquidity and dividend of life insurance companies and insignificant negative relationship between leverage and DPS. The correlation also shows that gross premium has significant negative correlation with DPS. Further, tangibility has insignificant positive relation with dividend. The regression analysis reveals that return on assets has significant positive impact on dividend of sample life insurance companies in Nepal. However, liquidity and gross premium have insignificant negative effect on dividend. Then, leverage ratio has insignificant positive impact on dividend payout. Moreover, tangibility has significant negative impact on dividend. Hence, this study concluded that return on assets and tangibility is the key factors of dividend in Nepalese life insurance companies. Key words: Dividend per share, return on assets, liquidity ratio, leverage ratio and tangibility.