Tracking endogeneity (GMM).

This study investigates the impact of environmental, social, and governance (ESG) scores on dividend policy, while taking into account the moderating effect of financial sustainability. It examines data from companies listed on the Saudi Exchange, during the period spanning the years from 2013 to 2022. According to the findings of panel regression analysis, there is a strong positive correlation between ESG performance and dividend payments. In essence, businesses that exhibit strong ESG practices continuously maintain dividend payments as a way of demonstrating their dedication to both stakeholders and shareholders. Furthermore, financial sustainability exerts an enhancing influence on the ESG–dividend relationship, indicating that the positive effect of ESG on dividend yields is significant in financially sustainable companies compared to their peers. It is noteworthy that these conclusions hold up well even when put through sensitivity studies using different estimating methods. The implications of these results extend to a broad spectrum of stakeholders, including investors, management, analysts, and policymakers. They provide valuable insights for companies and markets seeking to expand their ESG initiatives.