Impact of Dividend Distribution and Its Risk on Stock Value an Empirical Study in the Saudi Stock Market
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This study empirically investigates the impact of both the level and risk of cash dividend distributions on the stock value of companies listed on the Saudi Stock Exchange (Tadawul). Utilizing a proportional stratified random sample of 120 companies across 21 sectors over the period 2020-2024, the research employs third-degree polynomial regression models to analyze complex, non-linear relationships. The findings reveal a significant cubic relationship, identifying an optimal dividend per share of 5.91 SAR that maximizes stock price. Furthermore, dividend volatility (risk) exhibits an inverted S-shaped relationship with price, with an optimal standard deviation of 5.04 SAR, indicating that the market rewards a dynamically stable payout policy. The study also uncovers strong sectoral effects, with Telecommunication, Health Care, and Energy sectors commanding significant valuation premiums, while Real Estate and Financial Services trade at discounts. The results robustly confirm that both dividend level and stability are critical, sector-dependent determinants of firm value in the Saudi market. These insights provide valuable guidance for corporate dividend strategy, investment decision-making, and policy formulation within the context of Saudi Vision 2030.