Leverage and Dividend Payout Among Manufacturing Firms Listed on the Nairobi Securities Exchange, Kenya

Dividend payout remains an important corporate financial decision because it determines the proportion of earnings distributed to shareholders while balancing firms' financing and investment needs. This study examined the effect of leverage on dividend payout among manufacturing firms listed on the Nairobi Securities Exchange, Kenya. The study was anchored on Agency Theory and adopted an explanatory research design using a quantitative approach. A census of all ten manufacturing and allied firms listed on the Nairobi Securities Exchange was undertaken using secondary data extracted from audited annual financial statements covering the period 2016–2025. The analysis was based on an unbalanced panel of 85 firm-year observations and employed panel regression analysis. The Hausman specification test supported the use of the random effects model. The findings revealed that leverage had a negative but statistically insignificant effect on dividend payout (β = −0.003, p = 0.388), indicating that debt financing did not significantly influence dividend distribution decisions among the sampled firms. The study concludes that leverage is not a significant determinant of dividend payout among manufacturing firms listed on the Nairobi Securities Exchange. It recommends that firms maintain prudent debt management practices while considering other financial factors in formulating dividend policies. The findings contribute to the corporate finance literature by providing empirical evidence on the relationship between leverage and dividend payout within Kenya's manufacturing sector.