REFS is
a mine of invaluable information for the private investor.
Selecting shares without its help is like trying to
clap with one hand tied behind your back.
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Dividend
cover
Dividend
cover expresses, as a ratio, a company’s ability to pay ordinary
dividends to shareholders out of profits earned. It shows how
many times the ordinary dividend is covered by the profit available,
and is simply normalised earnings after tax, minority interest
and preference dividend, divided by ordinary dividends payable.
The abbreviation
‘na’ indicates that the dividend payout is nil, and dividend
cover is not applicable. When the dividend payout is low or
negligible, and the calculation of cover returns a very high
value, the abbreviation ‘vhi’ appears. A minus sign appears
when normalised earnings attributable to ordinary shareholders
are negative.
Calculation:
normalised
earnings after tax, min. int & pref divs
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= dividend cover (x)
ordinary
dividends payable
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