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Definition
Dividend cover is profit after tax divided by the total dividend paid. A cover of 2.0 means profit is twice the payout; below 1.0 means the company is paying out more than it earned.
In plain terms
High cover means the dividend is well protected; low cover means it is being funded from reserves and may have to be cut.
Why it matters for your company
Lenders read thin or falling dividend cover as a sign profit is being drained rather than reinvested or used to service debt. Check yours with the dividend cover calculator. See retained earnings.
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Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.