Corporate actions
Dividend cover
How many times over a company’s earnings could pay its dividend.
How it works
Cover is the inverse of the payout ratio. Cover of 2 means earnings are twice the dividend, leaving a cushion if profits fall.
Cash-flow cover is the more reliable version, since dividends are paid from cash rather than from accounting profit.
Formula
Dividend cover = earnings per share ÷ dividend per shareRelated terms
- Payout ratioThe share of earnings a company pays out as dividends rather than reinvesting.
- DividendA cash payment a company makes to its shareholders out of its profits.
- Free cash flowCash left over after paying for the investment needed to maintain and grow the business.
- Dividend cutA company reducing or suspending its dividend.
Mentioned in
More in Corporate actions
- Dilution
- Dividend reinvestment
- Delisting
- Corporate action
- Earnings announcement
- Consensus estimate
- Earnings revision
- Analyst rating
All 26 Corporate actions terms · The full glossary, 433 terms
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