Dividend Safety Score Is Now Available
Investing in dividend-paying stocks can be a reliable way to generate passive income, but not all dividends are created equal. While some companies maintain stable and growing payouts, others may struggle to sustain their dividends during challenging times. That’s where our dividend safety score comes in.
Designed to simplify the complexities of dividend analysis, this powerful feature helps you quickly assess a company's dividends' reliability and growth potential. By evaluating key financial metrics like payout ratios, cash flow stability, and debt levels, our score cuts through the noise and provides a clear, actionable measure of estimated dividend safety.
Whether you’re a seasoned investor or just starting your dividend journey, our dividend safety score saves you time and empowers you to make confident, informed decisions. Let’s explore how this innovative feature makes dividend investing smarter, simpler, and more secure.
Introducing dividend safety score
While no single metric or indicator can guarantee a dividend’s future, analyzing the right data is key to making informed investment decisions. That’s where the dividend safety score comes in.
This feature provides a quick, intuitive way to assess whether a company’s dividend is sustainable and has potential for growth—exactly what dividend investors aim for.
How our dividend safety score works
The system analyzes key financial data from income statements, balance sheets, and cash flow reports. It calculates six essential metrics and scores each one individually.
These scores are combined using a proprietary formula to generate the final dividend safety score, which is accessible in the stock detail view for dividend-paying stocks on our website. For example, we display AAPL’s dividend safety score on the company’s stock detail page.
While the score is a helpful guide, it’s not a standalone decision-making tool. Instead, it highlights areas worth exploring further to help you make more informed choices.
Key metrics
Forward payout ratio
Measures the percentage of estimated future net income allocated to dividends. Lower ratios suggest a safer dividend.
Payout ratio / Free cash flow
Assesses the proportion of free cash flow (cash from operations minus capital expenditures) used for dividend payments. A healthy ratio shows dividends are well-supported by cash flow.
Dividend growth (3-year CAGR)
Tracks the compounded annual dividend growth per share over the past three years. Consistent growth reflects financial stability and shareholder focus.
Revenue growth (3-year CAGR)
Measures the average annual increase in company revenue over the last three years, indicating whether the business is expanding sustainably.
Debt/EBITDA ratio
Evaluates a company’s ability to manage its debt by comparing total liabilities to EBITDA (earnings before interest, taxes, depreciation, and amortization). A lower ratio suggests better debt management.
Debt/Equity ratio
Analyzes financial leverage by dividing total liabilities by shareholder equity. A lower ratio indicates less reliance on debt for financing.
