Dividend Payout & Coverage Ratio Calculator
Assess the safety and sustainability of a company’s dividend payments. Calculate both the Dividend Payout Ratio and Dividend Coverage Ratio from per-share metrics or corporate totals.
Conservative Blue Chip
High Payout Utility
Struggling Dividend Trap
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Dividend Payout Ratio
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Enter parameters on the left to calculate safety margins.
Dividend Coverage Ratio:
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Retained Earnings Ratio:
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Earnings Cushion:
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Payout Health Spectrum
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Understanding Dividend Ratios
The Dividend Payout Ratio outlines the proportion of earnings a company distributes to stockholders in the form of dividends. The remainder is kept as retained earnings to fund future operational growth or reduce debt.
Mathematical Formulas
1. Dividend Payout Ratio:
Payout Ratio = ( DPS / EPS ) × 100
2. Dividend Coverage Ratio:
The Dividend Coverage Ratio measures how many times over a company can pay its dividends using its current net income/earnings:
Coverage Ratio = EPS / DPS
Safety Threshold Guide
- 0% to 35% (Conservative): Safe cushion. Typically found in fast-growing tech/health sectors.
- 35% to 60% (Healthy): Sustainable standard for mature industries. Safe growth margins.
- 60% to 85% (Aggressive): Common for utilities, REITs, or MLPs. Tighter cushion for earnings volatility.
- Above 85% (Risky): Danger zone. A dividend cut may happen if earnings slump.