What is dividend coverage ratio?

Dividend coverage ratio = EPS / Dividend Per Share (or Net Income / Total Dividends). It measures how many times a company could pay its dividend from current earnings. A ratio of 2× means the company earns twice its dividend. A ratio below 1× means the dividend exceeds earnings — an unsustainable position. The higher the ratio, the safer the dividend.

What is a good dividend coverage ratio?

A coverage ratio of 2× or above is generally considered good — the company earns at least twice its dividend with meaningful room for earnings to decline before the dividend is threatened. A ratio between 1.5× and 2× is moderate. Between 1× and 1.5× is weak — any earnings miss could immediately stress the dividend. Below 1× is a danger zone. Sector context matters: utilities typically operate safely at 1.2-1.5× while technology companies are expected to show 3× or more.

What is the difference between dividend coverage ratio and payout ratio?

They are mathematical inverses. Coverage ratio = EPS / DPS. Payout ratio = DPS / EPS × 100. A coverage ratio of 2× equals a payout ratio of 50%. A coverage ratio of 1.5× equals a payout ratio of 67%. Coverage ratio is expressed as a multiple (how many times earnings cover the dividend), while payout ratio is expressed as a percentage (what percent of earnings goes to dividends). Both convey the same information — just in different formats.

Why is FCF coverage ratio more important than EPS coverage?

EPS-based coverage uses reported net income, which can be affected by non-cash charges like depreciation, amortization, and accounting choices. FCF coverage (free cash flow divided by total dividends) measures actual cash available after capital expenditure — which is what physically funds the dividend. For capital-intensive businesses, FCF may be significantly lower than earnings, making FCF coverage the more conservative and reliable measure. If FCF coverage is much lower than EPS coverage, the dividend is less safe than reported earnings suggest.

What is DSCR (Debt Service Coverage Ratio)?

DSCR = Net Operating Income / Total Debt Service Obligations (including dividends). It measures whether a company's operating income is sufficient to cover all its fixed financial obligations — interest, principal repayments, and dividends. A DSCR below 1× means the company cannot cover its obligations from operating income alone. Lenders typically require DSCR above 1.2× as a loan covenant. Adding dividends to the denominator gives a comprehensive view of total financial obligations coverage.

Is this dividend coverage ratio calculator free?

Yes. The Dividend Coverage Ratio Calculator Pro on StockToolHub is completely free with no registration, account, or subscription required. All five tabs — EPS Coverage, FCF Coverage, DSCR, Trend, and Compare — are fully accessible.

Dividend Coverage Ratio Calculator Pro — EPS, FCF, DSCR, Trend & Compare

Input Method

Calculate from

Per Share Data

Earnings Per Share (EPS)

Diluted EPS (trailing twelve months)

Dividend Per Share (DPS)

Annual dividend per share

Context optional

Sector

Dividend Coverage Ratio (EPS)

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Enter EPS and DPS (or net income and dividends)

Payout Ratio

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Earnings Retained

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Safety Assessment

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Earnings Buffer

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Coverage Ratio Scale

Danger
<1×

Weak
1–1.5×

Moderate
1.5–2×

Good
2–3×

Strong
>3×

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Earnings Allocation — Dividends vs Retained

Multi-Year Coverage Ratio Trend

Year	EPS ($)	DPS ($)	FCF/sh ($) opt	EPS Coverage	FCF Coverage opt	Trend Signal

Coverage Trend

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Latest Coverage

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Average Coverage

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Lowest (Most Risk)

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Highest (Best)

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EPS and FCF Coverage Over Time

Compare Coverage Ratios

Company / Ticker	EPS ($)	DPS ($)	FCF/sh ($) opt	EPS Coverage	FCF Coverage	Payout Ratio	Safety

Best Covered Dividend

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Companies

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Avg EPS Coverage

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Best EPS Coverage

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Weakest Coverage

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EPS vs FCF Coverage by Company

What each tab calculates

EPS Coverage

Calculate dividend coverage ratio from EPS and DPS (per share) or total net income and dividends. Includes a visual coverage gauge, payout ratio, earnings retained, earnings buffer, and sector benchmark comparison for 9 industries.

FCF Coverage

Calculate FCF-based coverage using operating cash flow minus CapEx. Compares FCF coverage against EPS coverage, shows FCF after dividends, FCF payout ratio, FCF margin, and an automated insight on whether cash coverage is stronger or weaker than earnings coverage.

DSCR

Compute Debt Service Coverage Ratio including both interest and principal repayment obligations plus dividends. Shows dividend-only DSCR, debt-only DSCR, total DSCR, excess cash after all obligations, and a safety rating with automated verdict.

Trend

Track EPS and FCF dividend coverage over up to 15 years. Each row calculates both coverage ratios automatically. Summary shows trend direction (Improving / Declining / Stable), latest, average, highest and lowest coverage over the full period.

Compare

Side-by-side coverage comparison for up to 6 companies. Enter EPS, DPS, and optional FCF per share. Each row calculates EPS coverage, FCF coverage, payout ratio and a safety badge automatically. A grouped bar chart ranks all companies instantly.