Use EPS ÷ DPS to spot dividend safety fast; ratios above 2 mean earnings cover payouts twice over, a level many analysts call “comfortable” (Dividend Coverage Ratio — Investopedia, https://www.investopedia.com/terms/d/dividendcoverageratio.asp).
Dividend Cover Calculator
Dividend Cover:
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How to use the tool
Enter Earnings Per Share (EPS): Type the company’s EPS, e.g., 8.40 or 5.75.
Enter Dividends Per Share (DPS): Add the DPS figure, e.g., 2.10 or 3.25.
Press “Calculate”: The calculator divides EPS by DPS and shows the Dividend Cover ratio instantly.
Interpret the result: A value above 2 signals ample coverage; below 1 signals danger.
A Dividend Cover above 2.0 is viewed as safe (Dividend Coverage Ratio — Investopedia, https://www.investopedia.com/terms/d/dividendcoverageratio.asp).
The median cover for U.S. utilities is 1.5 (Edison Electric Institute Q4 2023 Report, https://www.eei.org).
Companies cut dividends 34 % more when cover falls below 1.2 (S&P Global Dividend Report 2023, https://www.spglobal.com).
Benjamin Graham popularised the EPS/DPS test in “Security Analysis” (1934).
FAQ
What is dividend cover?
Dividend cover shows how many times current earnings can pay current dividends, guiding payout sustainability (Dividend Coverage Ratio — Investopedia, https://www.investopedia.com/terms/d/dividendcoverageratio.asp).
How does the calculator work?
You input EPS and DPS; the script divides the two values to output the ratio in real time.
Which ratio indicates a safe dividend?
Most analysts prefer ratios above 2 because earnings double the payout obligation (Morningstar Guide 2022, https://www.morningstar.com).
What if the ratio is below 1?
The company pays more in dividends than it earns; cuts or funding from debt become likely (S&P Global Dividend Report 2023, https://www.spglobal.com).
How often should you recalculate?
Recheck every quarter when new financial statements release to track payout safety (SEC Filing Calendar, https://www.sec.gov).
Does negative EPS ruin the ratio?
Yes. Negative EPS makes the ratio negative, signalling dividends funded from cash reserves or debt, a red flag (CFI Accounting Handbook 2023, https://corporatefinanceinstitute.com).
How does dividend cover differ from payout ratio?
Payout ratio equals DPS ÷ EPS, while dividend cover is its inverse; both express the same relationship differently.
Where can you find EPS and DPS numbers?
Use annual reports, Form 10-K filings, or financial data platforms such as EDGAR or Yahoo Finance.
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