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Dividend Safety Rate is a comprehensive numerical rating that helps investors evaluate the risk associated with a company’s dividend payments. Ranging from 0 to 100, the rate provides an assessment where higher values denote greater security and lower likelihood of a dividend cut. This measure is particularly valuable for income-focused investors as it synthesizes key financial indicators including payout ratios, dividend history, and the overall financial health of the company.

By incorporating both dividend performance and broader financial metrics, the Dividend Safety Rate offers a holistic view of a company’s ability to maintain and potentially increase its dividend payments.

In calculating the Dividend Safety Rate, we consider a variety of financial metrics:

Multiple Payout Ratios: These include the current payout ratio and average historical payout ratios, which help assess how comfortably a company can cover its dividend payments with its earnings.

Dividend Growth Streak: The number of consecutive years a company has increased its dividend, indicating reliability and stability in its dividend policy.

Solvency and Profitability Ratios: These ratios evaluate a company’s ability to meet its long-term obligations and its overall financial health, which are crucial for sustaining dividend payments over time.

Dividend Yield is a financial ratio that shows how much a company pays out in dividends each year relative to its stock price. It is a popular metric among investors to gauge the return on investment from dividends alone, excluding any capital gains.

This metric is a key component of calculating Shareholder Yield as it directly measures the return on investment from dividends alone. Dividend Yield helps investors gauge the immediate income-generating capacity of their investment in the company, independent of any capital gains.

Including Dividend Yield provides a comprehensive view of the total returns a company offers to its shareholders, combining income from dividends with gains from buybacks and debt reduction.

Dividend Per Share (DPS) is a financial metric that quantifies the total amount of dividends declared by a company for each share of its common stock.

Payout Ratio is a key financial metric that measures the proportion of earnings a company pays to its shareholders in the form of dividends. It is expressed as a percentage and is calculated by dividing the total dividends paid by the company by its net income.