Dividend Coverage

A comparison of earnings and dividend payout to see whether the company has enough money coming in to cover what goes out to shareholders. Dividend coverage should be ample; a company earning barely enough to cover its dividend, or even less than the dividend it pays, will sooner or later have to cut its dividend. At the very least, dividend increases are impossible, and management's flexibility with respect to reinvestment and other issues is limited.

 

 

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