Dividend policy remains one of the most significant financial decisions influencing shareholder wealth, investor confidence, and corporate valuation. This study examines the dividend stability and profitability relationship of Hindustan Unilever Limited (HUL) over the period FY 2019–20 to FY 2023–24. The research investigates whether the company’s dividend decisions are primarily driven by profitability or reflect a strategically managed dividend smoothing approach.

The study is based on secondary data obtained from HUL annual reports, stock exchange disclosures, and financial databases. Trend analysis, correlation analysis, and regression analysis were employed to evaluate dividend behavior and test the applicability of major dividend theories. The findings indicate consistent growth in Dividend Per Share (DPS) throughout the study period, demonstrating a stable and progressive dividend policy. A strong positive relationship was observed between profitability indicators and dividend payments, while regression results provided substantial support for Lintner’s Dividend Smoothing Model. The study further reveals that dividend payments were maintained despite significant variations in capital expenditure, suggesting limited applicability of the Residual Dividend Theory.

The study concludes that HUL follows a shareholder-oriented dividend policy characterized by stability, profitability linkage, and strategic payout management, thereby reinforcing investor confidence and long-term value creation.