The study investigates the relationship between dividend payout ratio and the financial performance of Top40 firms since it represents 80% market capitalization of JSE firms. The several studies conducted both developed and developing countries, however, there is no universal agreement. As part of exclusion criteria, firms which fell out of Top40 throughout the study period (6 years) were not included in the final sample. Through panel data methodology, the results showed negative relationship between dividend payout ratio with profitability and liquidity, and a positive relationship were found on dividend payout with net profit margins, leverage, growth, and firm size. The outcome of this study could inform JSE listed firms to monitor their dividends policy because sustaining payment of dividends affect profitability of the firm and perceptions of investors. Moreover, the study could guide risk-averse investors to consider investing in low-growing firms since they tend to pay higher dividends.

Keyword: Dividend payout ratio; Profitability; Top 40 FTSE/JSE; South Africa,

Abbreviations: Top 40 FTSE/JSE, Financial Times and Stock Exchange /Johannesburg stock exchange