Dividend premium: Are dividend-paying stocks worth more?

Sigitas Karpavičius*, Fan Yu

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

6 Citations (Scopus)


This paper reports that the relation between dividend payout and firm value is positive. Panel data regressions suggest that the dividend premium for firms' equity is 17.4% and the dividend premium for firms' assets is 7.1%. The tests using propensity score matching methodology report a lower – but still positive and statistically significant – dividend premium: 12.5% for equity and 6.1% for assets. Thus, stock prices of dividend payers are greater by 12.5% or 17.4% on average (depending on methodology) compared to those of nonpayers. We find that policy-related economic uncertainty and the proportion of firms paying dividends explain more than half of the variation in dividend premium for assets.

Original languageEnglish
Pages (from-to)112-126
Number of pages15
JournalInternational Review of Financial Analysis
Publication statusPublished - 1 Mar 2018


  • Dividend policy
  • Dividend premium
  • Firm value

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