dividend cover


dividend cover
The number of times a company's dividends to ordinary shareholders could be paid out of its net profits after tax in the same period. For example, a net dividend of £400, 000 paid by a company showing a net profit of £1M is said to be covered 2½ times. Dividend cover is a measure of the probability that dividend payments will be sustained (low cover might make it difficult to pay the same level of dividends in a bad year's trading) and of a company's commitment to investment and growth (high cover implies that the company retains its earnings for investment in the business). Negative dividend cover is unusual, and may be a sign that a company is in difficulties. In the USA, the dividend cover is expressed as the pay-out ratio, the total dividends paid as a percentage of the net profit. See also price-dividend ratio

Big dictionary of business and management. 2014.

Look at other dictionaries:

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  • dividend cover — An accounting ratio defined as net earnings per share divided by net dividend ( dividends) per share. The purpose of the ratio is to identify how much of a company s profits are being distributed to shareholders and how much is being retained to… …   Financial and business terms

  • dividend cover — The number of times a company s dividends to ordinary shareholders could be paid out of its net profits after tax in the same period. For example, a net dividend of £400,000 paid by a company showing a net profit of £1M is said to be covered 2½… …   Accounting dictionary

  • dividend cover — /ˈdɪvədɛnd kʌvə/ (say divuhdend kuvuh) noun the number of times that the declared dividend is covered by a company s net profit …   Australian English dictionary

  • Dividend cover — Categories: Investment stubsDividends …   Wikipedia

  • dividend cover — noun the ratio of a company s net profits to the total sum allotted in dividends to ordinary shareholders …   English new terms dictionary

  • dividend cover — / dɪvɪdend ˌkʌvə/ noun the ratio of profits to dividends paid to shareholders …   Dictionary of banking and finance

  • equity dividend cover — A ratio that shows how many times the dividend to ordinary shareholders can be paid out of the profits of a company available for distribution. The higher the cover, the greater the certainty that dividends will be paid in the future …   Accounting dictionary

  • equity dividend cover — A ratio that shows how many times the dividend to ordinary shareholders can be paid out of the profits of a company available for distribution. The higher the cover, the greater the certainty that dividends will be paid in the future …   Big dictionary of business and management

  • Dividend stripping — is the purchase of shares just before a dividend is paid, and the sale of those shares after that payment, i.e. when they go ex dividend. This may be done either by an ordinary investor as an investment strategy, or by a company s owners or… …   Wikipedia


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