Dividend Cover Ratio
Dividend cover = EPS/ DPS = Earning to ordinary shares/Dividend paid
- This signifies the number of times dividend can be paid from earnings to ordinary shareholders. The higher the DPS the lower the dividend cover and vice-versa as consider the following two firms X and Y
|
|
X
|
Y
|
|
EPS
DPS
Dividend Corner
|
12
3
12/3 = 4
|
12
4
12/4 = 2.4 times
|