The Relationship between Financial Ratios and Dividend Yield of Listed Companies in the Service Industry Sector on the Stock Exchange of Thailand

Abstract

Background and Aims: In periods of market volatility, investors may prioritize receiving dividends over speculating on stock prices. The dividend yield is one of the indicators used by investors to assess the return on investment in stocks, showing the return that shareholders receive in the form of dividends relative to the stock price at that time. This study aims to test the relationship between financial ratios and dividend yield for companies listed on the Stock Exchange of Thailand in the service industry sector.

Methodology: This study is a quantitative research. The researcher collected data from the online market information system of the Stock Exchange of Thailand for the fiscal years 2020-2022, totaling 321 data points. Data analysis was conducted using descriptive statistics, including mean and standard deviation, and inferential statistics, including correlation coefficients and multiple regression analysis.

Results: The financial ratios that have a statistically significant relationship with dividend yield at the 0.01 level include the current ratio and the debt-to-equity ratio. Meanwhile, the debt-to-asset ratio, return on assets, return on equity, and net profit margin have a statistically significant relationship with dividend yield at the 0.05 level.

Conclusion: The research results indicate that the financial ratios associated with dividend yield include the current ratio, debt-to-asset ratio, debt-to-equity ratio, return on assets, return on equity, and net profit margin. These financial ratios reflect the company’s profitability and financial stability. When these ratios are at favorable levels, companies are more likely to pay higher and more consistent dividends, which benefits investors seeking returns in the form of dividends.