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The present study investigates the empirical relationship between the stock yielding and the dividends payouts. The results indicate that the significant levels of the phenomenon are the results of a non-linear relationship between the dividend earnings and the returns from the stocks in the Saudi Stock Market. The regression coefficients on the dividend payouts that some models forecast should be non zero owing to differential taxation of the capital gains and dividend yields, indicate significant control of the outcome even when considering the market size. These results are significant because there were no provisions in the post-tax stocks pricing models that could be used to predict the tax differential more effectively.

The verification of dividend earning returns predictability has been considered. The results show that stocks yields predictability in relation to the dividends earning is a hypothetical result that is as a result of dividend persistency, and it indicates that the standard dividend payout explanatory models are highly affected by the hypothetical regression. The sample data from SSM were used to account for the correlation or lack thereof that compounds the hypothetical regression problem where the dependent and independent variables in the time series simple regression are the ratios comprising the common components variables in the stock market. 

According to the current work, the knowledge on the impact of the financial decisions on stock risk is an important matter to the management of the stock firm trying to maximize the wealth of shareholders through dividends payout. With this intention in consideration, the current study has been conducted to investigate the relationship between the performance indicators, such as dividends and earnings on the stocks, and the risks in the banking sector in an emerging stock market, such as SSM. The performance ratios for 10 commercial banks in the banking sector in the SSM and the banking holdings over a period of 10 years were obtained from the balance sheets and the income statement data. The performance indicators applied included the coefficient of the variations of the investors’ deposits, dividends payout ratio, the equity ratio to the total deposits, the coefficient of the variations of earnings per share, the ratios of the total loan to the total deposits, the loan loss reserve, and the ration net income over the total assets.

Code: Sample20

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