Dividend policy is indeed one of the most controversial issues in an organization.
Dividend payment and company’s earnings have become one of the most concerning
subjects to shareholders in company. The way on how company decided to spend their
net profit, either by declaring dividend distribution or reinvestment for future capital
gains, both will have direct effect on shareholders’ wealth. This study aims to examine
the impact of dividend policy on shareholders’ wealth in Malaysian Consumer Product
Industry. Dependent variables in this study are earning per share (EPS) and dividend
per share (DPS) whilst dividend payout ratio (DPR), return on equity (ROE) and
retention ratio (RR) are the independent variables. The data for all variables in this study
has been collected through Thomson Reuters Datastream. 100 companies listed in Bursa
Malaysia particularly in Consumer Product Industry have been selected as sample of
this study starting from the year of 2011 to 2015. Descriptive statistic, correlation and
regression analysis have been conducted in order to identify the impact of dividend
policy on shareholders’ wealth. The findings of this study show that there is positive
and significant relationship between EPS and DPS. Nevertheless, DPR has showed
negative significant relationship with EPS. Besides, there is insignificant yet positive
relationship between EPS and ROE. On the other hand, RR has showed negative and
insignificant relationship with EPS. From the regression’s analysis, it is found that DPS
is the most significant factor that influences shareholders’ wealth. This study is
beneficial to the policy makers, managers, shareholders and academicians
