Meaning of dividend cover

 

 

 

Dividend cover

 

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Business glossary

 

Meaning of term dividend cover :

 

Dividend cover is a ratio that measures the potential for future capital growth of the firm. It measures how easily the dividend can be paid (or 'covered') out of the current profits of the firm. It is calculated by dividing the profit accruing to shareholders by the level of dividends. The higher the figure, the easier it was for the firm to 'cover' their dividends. This may indicate that more profit has been re-invested in the firm and therefore the possibility of higher future growth. However, a high dividend cover may be a bad sign for an investor looking for short term income from the investment. Dividend cover is described as a shareholders ratio.

 

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Source : http://business-tes.wikispaces.com/file/view/Glossary.doc

 

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Dividend cover

 

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Meaning of term dividend cover