A Multivariate Analysis of Dividend Stocks, Inflation and Stock Returns in Nigeria

The purpose of this study was to ascertain the dependence of dividend stocks on the inflation rate and stock returns in the Nigeria Stock Exchange. Guided by two research questions and two null hypotheses, the study analyzed sample data from 21 companies quoted on the Nigerian stock market, using secondary sources including the Nigeria Bureau of Statistics and the Nigeria Stock Exchange.

The study employed multivariate analysis and utilized an ordinary least squares multiple regression model. The cross-sectional diagnostics test results confirm the robustness of the model, showing no significant cross-section dependence. Additionally, panel unit root tests for the series DS, INF, and SR indicate that all series are stationary, ensuring the reliability of statistical inferences.

The findings revealed that the inflation rate (INF) has a negative and insignificant effect on dividend stocks (DS) of the selected companies, suggesting a weak influence of inflation on dividend stocks. This aligns with previous studies indicating that inflation does not have a strong impact on dividend stocks. Conversely, stock returns (SR) showed a positive but insignificant effect on dividend stocks, indicating a minimal impact of stock returns on dividend payouts during the study period.

The results suggest that investors should focus on company-specific factors and broader market conditions rather than relying heavily on inflation rates and stock returns when evaluating dividend stocks in Nigeria. The study emphasizes the importance of considering a company's financial health and profitability in investment decisions and highlights the need for diversified investment strategies.