Dividend cover,

Definition of Dividend cover:

1. The ratio of a companys net profits to the total sum allotted in dividends to ordinary shareholders.

2. Measure of a firms ability to pay its dividend. Higher the cover, the greater the possibility of earning the dividend and greater the chance of an even higher amount. Formula: After-tax profit ÷ Expected (declared) dividend. See also payout ratio.

How to use Dividend cover in a sentence?

1. Sure, they upped the payout in 2002 by 250% to 1.5p per share, but the dividend cover still remains nearly five times.