Dividend premium: Are dividend-paying stocks worth more?

Sigitas Karpavičius*, Fan Yu

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

15 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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