Dividend policy determinants in CEE countries

Abstract

Investors in emerging markets often undertake above average risk, which can be reduced by including dividend paying stocks in the investment portfolio due to the following features: performance stability and predictability of the payouts. Besides, the dividends make significant part of the total shareholder return in the developed stock markets. The present research analyzes dividend payment behaviour within the CEE stock market, discusses its sustainability, looks into the factors which influence dividend payout ratio. According to the obtained results, dividend behaviour in CEE countries follows the pattern of the dividend payment behaviour observed in the developed markets: small capitalization companies are weak dividend payers and typical industries providing high yields are telecoms and utilities. Among other factors influencing the amount of dividends paid out by CEE companies, profitability and balance sheet stability are to be mentioned.