EXECUTIVE SUMMARY: Dividend policy decisions is one of the important decisions of financial management because it affects the financial structure, the flow of funds, corporate liquidating and investor’s attitudes. The main aspect of dividend policy is to determine the amount of earnings to be distributed to the shareholders and the amount to be retained in the company. Dividend policy involves the decision to payout earnings versus retaining them for reinvestment in the company. The relationship between dividend and the value of the share is not obvious. The financial manager must understand the various conflicting factors which influences the dividend payout policy before deciding the allocation of its company’s earnings into dividends and retained earnings.
Hydropower sector is one of the prominent sector for the economic growth of the country as Nepal is rich in water resources and have the potential to generate 43,000 MW of energy practically and theoretically 83,000 MW however Nepal has produced only 855.886 MW of energy as of now. As the government has issued white paper regarding energy development and policy of every Nepali citizen being the shareholder of hydropower projects, it has attained a lot of attention from private sector investments and also foreign investments. Therefore to attract the private and foreign investment towards hydropower it needs to be ensured that the project is sustained enough to have significant impact over maximization of shareholders wealth. However, as of now the financial performance evaluation of hydropower sector is still lacking. Therefore the focus of this study is to highlight the financial performance through evaluation of various variables determining dividend payouts. It further aims to identify the most influential factors that have significant impact over making dividend payout decisions. 
The study is conducted with the secondary sources. The secondary data are collected of 6 hydropower companies covering the period of 2012/13 to 2017/18. It followed quantitative approach to analyze the findings of the study.
For secondary analysis both descriptive and inferential data analysis method have been used in order to draw a logical conclusion. The Pearson correlation coefficient and regression analysis has been used to draw a meaningful conclusion in this research. The major conclusion of the study is that the specific variables explain the dividend per share in the context of hydropower sector in Nepal.. Earnings per share (EPS), Return on equity (ROE) and Investment opportunities (MV/BV) are the major determining variables among the other specific variables. The other variables such as Market price per share (MPS), Price earnings ratio (PE) and Leverage (TD/DA) have the weak impact on dividend payout per share. 
There are lots of complexities and it leaves many unanswered questions regarding accurate dividend payouts for the maximization of the shareholders wealth. A better understanding of dividend behavior in this regard will require much additional research.

ACKNOWLEDGEMENT
The research entitled “Factors affecting dividend payouts of hydropower companies in Nepal” has been prepared under the graduate research project as partial fulfillment of Masters of Business Administration (MBA) under program of faculty management, Pokhara University.
I extend my deepest gratitude to our GRP supervisor Mr. Dipendra Karki for his support, encouragement, motivation and help throughout the dissertation work.