There are not enough evaluation on the listed companies, especially for those companies with a relatively small scale. And, more importantly, I consider that the profit ability ratio is one of the obviously potential facts affecting the dividend payout because corporate profit is the basement of dividend payout. In addition, if earnings and dividends have a certain relationship, investors can also forecast the cash dividend based on the intuitive performance indicators to guide their own investment. That’s why I choose this title. In this paper, I will use the actual data about the profitability ratio and the dividend payout in order to find the relationship between the listed company earnings and cash dividend payment level and judge whether the phenomenon of high profitability and low dividend is a common phenomenon.
2. Literature review
There are many theories on the dividend policy, and the factors affects the formulation of dividend theory is complicated. In this part, there will be a basic introduction and analysis of the above-mentioned two aspects, and forms the theoretical framework of later analysis.
2.1 Dividend theory
Gordon（1962）made further research on value of company dividend model and put forword "a bird in the hand" theory. Gordan believes that hat compared with an uncertain future capital gains income, shareholders have a stronger high dividend policy preferences. Under conditions of uncertainty in the future, the company paid dividends and profits distribution between retained earnings will affect the company's stock price. Enterprise value is equal to the sum of value of the company issuing the company's future and the present value of dividends.
Miller and Modigliani(1961) published an article entitled "Dividend Policy and Share Growth and Stock Price" in "Business Magazine" and put forward that under meeting a series of assumptions, the company's the company's dividend policy has nothing to do with the value of the company,which is known as the MM dividend irrelevance theory.They believe that investors are not very concerned about corporate dividends, when the company more profits retained for reinvestment will lead to rising stock prices, this time despite a lower level of dividend payment, investors can sell the stock for capital gains , stock returns will compensate for reduced dividends; Conversely, if the company paid more dividends, investors can buy shares paid in cash and then to expand investment, so you can achieve the same dividend policy with a low total revenue. The article published in the dividend policy research produced a significant impact upon the article published immediately aroused the academia on the relevant dividend or dividend irrelevance of heated debate, it subverts the traditional theory of the hands of a bird, the dividend would not affect the value of the company problem itself has become three decades later dividends field research.