Abstract:
Abstract: Abstract This paper intends to explore the relationship between dividend policy and financial gearing of
listed non-financial companies in Tanzania. A case study of seven (7) non-financial companies listed at Dar es Salaam
Stock Exchange (DSE) was used to assess this phenomenon. Unbalanced panel data from these companies’ annual
reports were used, covering 2002 to 2018. Generalized linear regression analysis was used to examine the phenomenon
mentioned above with Akaike Information Criterion (AIC) and Beysian Information Criterion (BIC) to select the most
appropriate models. The results from generalized linear regression analysis indicated that companies with higher
dividend payouts have lower gearing. Further results show that higher dividend payouts are associated with a lower
cost of debts as debt providers deem these companies to be stable and less risky. So this study urges profitable firms to
pay out dividends as a sign of financial strength which eventually reduces the cost of debt. But caution must be taken
by financial managers to ensure that a sufficient amount of internal funds are retained after paying dividends for future
endeavours.
