EFFECT OF CAPITAL STRUCTURE ON THE DIVIDEND DECISION OF INDUSTRIAL GOODS COMPANIES IN NIGERIA

This study investigated the effect of capital structure on the dividend decision of industrial goods companies in Nigeria. Specifically, it examined the effect of equity capital, debt capital, and gearing ratio on dividend payment. An ex-post facto research design was adopted, relying on secondary data obtained from the published annual reports and financial statements of all eleven (11) industrial goods companies listed on the Nigerian Exchange Group (NGX). A census sampling approach was employed, covering the period 2021–2024. Data were analyzed using descriptive statistics and panel regression techniques to account for both cross-sectional and time-series variations. Diagnostic tests, including the Lagrange Multiplier test, were conducted to determine the most appropriate regression model. The panel regression results revealed that capital structure variables jointly exerted a significant influence on dividend per share (DPS) of industrial goods companies in Nigeria. Equity capital exhibited a positive and statistically significant effect on dividend payment, with a coefficient of 133.54 at the 5% significance level, indicating that firms with stronger equity bases were more capable of sustaining dividend distributions. Debt capital also showed a positive and highly significant effect on dividend payment (β = 1912.76, p < 0.01), suggesting that increased debt financing was associated with higher dividend payouts, possibly as a signal of financial strength and confidence to investors. The gearing ratio had a positive coefficient of 488.91 and was significant at the 10% level, implying a moderate influence of leverage on dividend decisions. The study concluded that capital structure is a key determinant of dividend payment among industrial goods companies in Nigeria, with equity and debt capital playing dominant roles. It was recommended that firms maintain a strong equity base, strategically manage debt levels, and sustain an optimal gearing ratio to enhance dividend policy and shareholder value.