What is the dividend cover? How is dividend cover calculated?
The dividend cover is a calculation of how many times the profits of a firm could pay for its dividend. For example, if a firm earns $10 million but has dividend payments of $5 million, the dividend cover is 2.
Dividend cover is most easily calculated by dividing Earnings Per Share (EPS) by the Dividend Per Share (DPS). In the above example assuming one million shares, EPS would have been $10 and DPS $5, with the dividend cover once again being 2 ($10 / $5 = 2).