This study aimed to examine the relationship between dividends and share prices of the firms listed in Saudi Stock Exchange. For this purpose, a sample consisted of 172 firms (out of 207 listed firms) was selected. To identify the impact of dividends on share prices, the correlation analysis and the linear regression been applied for a period of ten years from 2010 to 2019. The findings of the study showed that dividends (as independent variable) explain the variations in the share prices (as dependent variable). Furthermore, the findings indicated that dividends have a positive effect on the share prices. However, the study attempted to interpret its findings based on the hypothesis (Bird-in-the-hand). Finally, the study recommends that firms should give high priority to investments that give high Net Present Values, thereby making huge earnings, which used to yield high benefits to the owners.