The role of payout ratio in the relationship between stock returns and dividend yield

Ian McManus, Stephen Thomas, Owain ap Gwilym

Research output: Contribution to journalArticlepeer-review

18 Citations (SciVal)

Abstract

This paper examines the relationship between returns and dividend yield in the UK stock market, and introduces earnings‐related data to the asset pricing model in the form of payout ratio. The latter has a considerable effect upon the inferences which would otherwise be drawn from a study of the dividend yield‐returns relationship in the absence of such earnings information. Payout ratio conveys additional signalling information and is an important adjunct to dividend yield in explaining returns.
Original languageEnglish
Pages (from-to)1355-1387
Number of pages33
JournalJournal of Business Finance & Accounting
Volume31
Issue number9-10
DOIs
Publication statusPublished - Nov 2004

Keywords

  • returns
  • asset pricing
  • payout ratio
  • dividend yield
  • earnings

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