Topic
Dividends
Dividend income is a promise the company can revise. Coverage, cuts, stock dividends and what to do with the income when a payout shrinks.
A dividend is paid out of earnings and cash flow, and a board can change it at any meeting. Income investors do better planning for the occasional cut than hoping to dodge every one.
Coverage tells you how much room a payout has. The dividend cut calculator shows what a reduction does to your yearly income and how much capital it would take to replace.
Income also changes shape when a company is bought, pays in shares, or moves from quarterly to monthly payments. The walkthroughs take each case in turn, with the arithmetic on a hypothetical holding, so the effect on your own income can be worked out before the change arrives.
Viewpoints
All viewpoints →-
By the numbers
Plan an Income Portfolio Around the Next Dividend CutSet income spending as if one holding cuts its dividend every year; a plan that needs zero cuts breaks on the first one.
Walkthroughs
All walkthroughs →Dictionary
Full dictionary →- Dividend coverage ratio
A measure of how many times a company's earnings per share would pay its dividend per share, used to judge how much room the payout has if profits fall.
- Stock dividend
A distribution of additional shares to existing holders in proportion to what they own, stated as a percentage of shares held, paid in place of or alongside a cash dividend.
Courses, practice and tools
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Calculator
Dividend Cut CalculatorAnnual income before and after a dividend cut, the new yield on cost, and the capital needed to replace the lost income.