dividend cover

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 finance future expansion of the business. Generally a company with a low dividend cover is paying out most of its earnings as dividends and is unlikely to achieve high growth in the future, compared to a company with high dividend cover. Dresdner Kleinwort Wasserstein financial glossary

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dividend cover ˈdividend ˌcover noun [singular] FINANCE
a company's profits for a particular period measured in relation to the amount that it pays out in dividends for the period of time:

• The company wants to bring its dividend cover down from 2.8 times to the sector average of 2.3 times.

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   The extent to which a company's dividend and/or interest payments are matched or exceeded by its earnings. Expressed as a multiple. The company's rating in the market increases as the multiple rises.

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dividend cover UK US noun [C or U]
► FINANCE a measure of a company's ability to pay a dividend, calculated by dividing the company's profit by the amount of the dividend: »

This year we are able to report a dividend cover of 4.6 times, as compared to 3.8 times last year.

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A high dividend cover ratio will be attractive to investors seeking a secure investment.


Financial and business terms. 2012.

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Look at other dictionaries:

  • dividend cover — The number of times the dividend per share can be divided into the earnings per share (that is, the number of times a company could pay its recent dividend out of its net profit). Practical Law Dictionary. Glossary of UK, US and international… …   Law dictionary

  • 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 — 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… …   Big dictionary of business and management

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

  • 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

  • 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

  • Dividend payout ratio — is the fraction of net income a firm pays to its stockholders in dividends: The part of the earnings not paid to investors is left for investment to provide for future earnings growth. Investors seeking high current income and limited capital… …   Wikipedia

  • 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

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