Abstract: The financial success of a SACCO is measured by the profits that it makes. From the profits made, the directors have to make a decision on whether to retain or to distribute to the members as dividends. The decision seek to establish how much to distribute or retain, when and in which form. Several factors are considered while making the dividend decisions which includes; investment opportunities, profitability level, prior dividends and nature of earnings growth. Dividend decisions have an effect on the growth of the SACCO. The main objective of the study is to analyze the impact of dividend policy on the growth of SACCOs in Kiambu County. The study period will be a five year period i.e. 2013-2017. A descriptive research design was applied with a sample of 12 SACCOs which will be in operation in Kiambu County during the period under study. The population of interested consisted of the entire 56 active SACCOs in Kiambu County. Secondary data was collected using the financial statements of the SACCOs sampled for the period of five years. Analysis of data was done using linear regression model and presented in graphs, tables, descriptive statistics and inferential statistics as was generated using the statistical package for social sciences (SPSS) version 21.0. Regression model was used to establish the causal relationship between two variables, that is, a dependent (Sacco savings) and independent variables (dividend policy) and growth in membership. The study concluded that SACCO‟s savings have grown and increased due to dividend policy for the period under the study. The study also concluded that dividend policy led to increase in dividend yields of the SACCOs and had also improved while membership growth had also increased over the period under the study which increased Sacco‟s capitalization. The study concludes that there existed strong and negative correlation between dividend yield and SACCOs Savings .This was because increase in dividend yield led to increase in dividend payout in cash which negatively affected SACCOs Saving level. Further study concluded that there existed a significant strong positive correlation between Sacco‟s membership growth and SACCO Savings‟ as increase in membership increased Sacco‟s capitalization. The study further concluded that there was significant positive relationship between membership growth and SACCOs Savings as a unit increase in membership growth would lead to increase in SACCOs Saving. The study concluded that growth of savings and credit co-operative societies in Kenya were greatly affected by increasing dividend payout as a unit increase in dividend yield resulted into significant negative in SACCOs Savings. Based on the findings and conclusions of the study the following recommendations have been suggested in relations to effects of dividend policy and savings in SACCOs. The study recommend that SACCOS management should develop dividend policy that lower consumption of divided and increase savings rates in as this would lead to SACCO‟s savings increasing. The study found that earnings dividend policy creates certainty in the shareholders expectations but lower savings of SACCOs. The study found that a positive relationship between Sacco‟s membership growth and SACCO Savings‟ exists thereby indicating that increase in membership increase SACCOs capitalization hence increase SACCO growth. The study recommends that Sacco‟s management should lower dividend yield rate and increase income investment to increase growth of SACCOs. Growth of savings and credit co-operative societies in Kenya were greatly affected by increasing dividend payout as a unit increase in dividend yield resulted into significant negative in SACCOs Savings.
Keywords: dividend payout ratio, form of dividend, frequency of dividend payments.
Title: IMPACT OF DIVIDEND POLICY ON THE GROWTH OF SACCOs IN KENYA
Author: Joseph Wambugu Muchira, Dr. James Mwangi
International Journal of Social Science and Humanities Research
ISSN 2348-3156 (Print), ISSN 2348-3164 (online)
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