Dividend coverage ratio (DCR), or dividend cover, is a financial ratio which tells how many times a company is able to pay dividends to its shareholders with net income. The formula for calculating the dividend coverage ratio is as follows:

Dividend Coverage Ratio = Net Income / Dividend Declared

This formula can be modified to calculate the DCR for common shareholders:

DCR = (Net Income - Required Preferred Dividend Payments) / Dividends Declared to Common Shareholders

Moreover, the following formula measures the number of times a company is able to pay dividends to preferred shareholders:

DCF = Net income / Dividends Declared to Preferred Shareholders

Reviews Add a review
No reviews yet

More From Corporate Finance Institute®

Browse our top rated business templates. See All
REIT Financial Model Template
This REIT financial model template acts as a guideline for modeling a real estate investment trust (REIT). This model will…
Energy Industry Comps Template Energy Industry Comps Template
This energy industry comps template provides a guideline and example of what a comparables universe would look like for a…
Financial Institution Dividend Discount Model
The financial institution dividend discount model uses future dividends to find the implied share price. This model is based on…
Loan Payment Calculator
The loan payment calculator allows users to determine the principal and interest payment each month until the full balance of…
DDM - Excel Dividend Discount Model Template
The dividend discount model template allows investors to value a company base on future dividend payments. This is based on…
Non-directional trading strategy template Non-directional Trading Strategies Template
The non-directional trading strategies template allow users to determine the profit when buying options. This template focuses on non-directional strategies…
See All