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Published on
07/21/2022

Dividend safety score is now available

Choosing the right dividend stocks is difficult as there is a lot of information to process and lot of decision to be made. You can get easily buried in multiple websites, spreadsheets, reports and articles screaming to buy (or not to buy) some stock.

We decided to something about it. After all, we have over 75,000 stocks in database – along with quarterly reports, dividend history and other technical data. This is very precious data. Especially combined with years of experience...

Introducing dividend safety score

The truth is that nothing, no ratio, no indicator can guarantee the future. But that doesn't mean we shouldn't study the stocks we want to make up our dividend income. That's where our new feature comes in - the Dividend Safety Score.

At one glance you should be able to see that the dividend is well covered and that the company will continue to pay it and increase it and that's the goal of dividend investors.

How dividend safety score works?

Our system automatically pulls data from income statements, balance sheets and cash flows data. It then calculates six key metrics and scores them separately. You can see this breakdown in stock detail.

To get final score systems adds these scores together according to our proprietary formula and comes up with a result.

You shouldn't never make decisions based on score alone. This product is designed to serve only as an indicator of what areas to explore more and decide for yourself how the data will affect your decision.

Forward payout ratio

Forward dividend payout ratio is the ratio of the total amount of dividends paid out to shareholders relative to the future estimated net income of the company.

Payout ratio / Free cashflow

Free cash flow is defined as cash from operations minus capital expenditures. Free cash flow after dividends is defined as cash from operations minus capital expenditures and dividends. Free cash flow dividend payout ratio is defined as the percentage of dividends paid to free cash flow.

Dividend growth (3y CAGR)

CAGR dividend growth measures the average growth in last 3 years. Dividends per Share. Consistent dividend payments indicate a company with a certain level of financial stability. If companies are able to frequently increase their dividend payments then this may be a sign of financial stability and growth.

Revenue growth (3y CAGR)

CAGR revenue growth measures the average revenue growth in last 3 years.

Debt/EBITDA ratio

The debt/EBITDA ratio compares a company's total obligations, including debt and other liabilities to EBITDA. It tells us how well the company can handle its debts. EBITDA represents a company's clean earnings.

Debt/Equity ratio

The debt-to-equity (D/E) ratio is used to evaluate a company's financial leverage and is calculated by dividing a company’s total liabilities by its shareholder equity.

Use sector comparison together with score

To get a better overview, we recommend looking at comparisons against the sector average. This data will give you a better idea of how the company is doing compared to its competitors. The system gets an average for comparison by taking stocks from the same sector and with a similar market cap, so only relevant stocks are compared.

Disclaimer

All information provided on website are provided for informational purposes only. All opinions provided in this article are based upon sources believed to be accurate and are written in good faith, but no warranty is given representation, or guarantee, whether expressed or implied, is made as to the accuracy of the information contained herein.

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