What Is a Dividend Cover?

Dividend protection multiple is an indicator of the company's ability to pay dividends to shareholders, which is derived by dividing the dividend payable surplus (ie the profit attributable to shareholders) by the dividend. It is directly proportional to the ability to pay dividends. For companies with a stable dividend payout, the higher the multiple, the higher the market evaluates it.

Dividend protection multiple

Right!

Dividend protection multiple refers to the company's

Dividend Guaranteed Multiple Test to assess the following:

1. Sustainability of the dividend payout ratio of consumer listed companies with high dividend yields

2.Currently companies with lower dividend payout ratios have increased their payout ratios.

When there is no other bond before a preferred stock is paid, the income that can be used to pay it can be expressed in US dollars earned by US stocks, or it can be expressed in terms of the dividend protection multiple it contains. To calculate earnings per share, simply divide the total net equity (net profit) available for dividends by the total equity. However, if there are publicly issued bonds, when calculating the preferred dividend protection multiple, it should be analyzed in combination with fixed or interest costs. In other words, you have to work out how many times the usable income you earn is equivalent to "total fixed fees plus dividends". In these cases, it is common practice to calculate the multiples of the preferred dividend protection separately, but that method is not applicable when buying bonds for investment, which can lead to serious misleading consequences.

Preference shareholders must require a higher minimum coverage than corporate bond holders. But in reality, sometimes the actual multiple of the preferred stock protection is smaller. Because for any company, the safety margin to obtain single bond interest is obviously higher than to obtain both bond interest and preferred stock dividend. ^[1]