Methodology › Dividend Safety Score
Dividend Safety Score: How It Is Calculated
The Dividend Safety Score is a number from 0 to 100 that summarizes how strong the observable financial indicators that support continued dividend payments are: how much of its earnings or cash flow a company pays out, how much it owes, how comfortably it covers its interest, how steady its profits have been and what its dividend record shows. This page sets out every input, table and weight, so that any score on the site can be checked by hand.
What the score answers
The score answers one question: how strong are the observable financial indicators that support continued dividend payments? It reads a company's most recent reported financial statements and its dividend history, turns each measure into points on a fixed table, and combines the points with fixed weights. A higher score means that, on these measures, the dividend is supported by more earnings or cash flow, less debt and a longer unbroken record.
What the score is not:
- Not a probability. A score of 80 does not mean an 80% chance of anything.
- Not a forecast. It summarizes reported figures and the dividend record as they stand; it does not project them.
- Not advice. It is the same for every visitor and takes no account of anyone's circumstances, holdings or objectives. It is not a recommendation to buy, sell or hold any security, and it is not a credit rating.
- Not a complete picture. It uses only the measures listed on this page. Business prospects, management, competition, pending transactions, legal matters and anything else not in our data are not part of it.
Dividends can be reduced, suspended or eliminated at any time at the discretion of a company's board, including by companies with high scores.
Profiles: different measures for different businesses
Businesses fund their dividends in different ways, so one set of ratios does not fit all of them. A bank's debt is its raw material, a real estate investment trust's earnings are reduced by property depreciation that does not consume cash, and a business development company holds loans valued at market prices. Each security is therefore assigned a profile, and each profile uses the measures that fit its kind of business. The profile comes from our classification of every security by type and kind of business, which is based on its listing, its filings with the SEC and our data providers' records (see Security classification).
| Profile | Securities | Measures used | Why |
|---|---|---|---|
| Ordinary companies | Common shares and ADRs of companies not in another profile. Insurance brokers are treated as ordinary companies. | Earnings payout, free-cash-flow payout, net debt ÷ EBITDA, interest coverage, earnings stability, dividend record | A dividend is paid from earnings and cash; debt and interest compete for the same cash. |
| Utilities | Electric, gas and water utilities | As ordinary companies, with earnings payout weighted most, free-cash-flow payout weighted lightly and a utility leverage table | Utilities routinely spend more on new plant and networks than they generate in cash and fund the difference with debt and new shares, so their free cash flow is often negative while the dividend is steady. Regulated revenue usually supports more debt than an ordinary company carries. |
| REITs | Real estate investment trusts | Operating-cash-flow payout, net debt ÷ EBITDA on a REIT table, interest coverage on EBITDA, stability (positive operating cash flow), dividend record | Depreciation of property reduces a REIT's reported earnings without using cash, so a payout ratio on earnings overstates how much of its cash a REIT pays out, and interest coverage is measured before depreciation (EBITDA) for the same reason. The industry's own measures, funds from operations (FFO) and adjusted FFO, are not in our data; operating cash flow is used in their place. |
| BDCs | Business development companies | Debt ÷ equity, change in net asset value (NAV) per share, 3-year earnings payout, dividend record | A BDC lends to and invests in private companies and is valued on the net asset value of that portfolio. Its leverage, the trend of its NAV per share and how much of its income it pays out describe its dividend support better than the measures used for operating companies. Net investment income (NII), the industry's usual coverage measure, is not in our data; reported net income over three years combined is used in its place. |
| Banks | Banks and bank holding companies | Earnings payout on a bank table, equity ÷ total assets, return on assets, earnings stability, dividend record | Borrowing is a bank's business, so debt ratios, free cash flow and interest coverage say little about its dividend. Regulatory capital ratios (such as CET1) are not in our data; equity as a share of total assets is used as a simpler measure of the capital cushion. |
| Insurers | Insurance companies (not brokers) | Earnings payout, interest coverage, debt ÷ equity, earnings stability (weighted more), dividend record | An insurer's cash flow mixes premiums collected in advance with purchases and sales of investments, so free cash flow is not used. Earnings can swing with claims, so stability carries more weight. |
| MLPs | Publicly traded partnerships organized in the U.S. | Operating-cash-flow payout, net debt ÷ EBITDA on an MLP table, interest coverage on EBITDA, stability (positive operating cash flow), dividend record | MLPs pay distributions from cash flow, and their own coverage measure, distributable cash flow, is not in our data; operating cash flow is used in its place. Like REITs, they carry heavy depreciation, so interest coverage is measured on EBITDA. |
| Funds | ETFs, closed-end funds, fund and trust units | Not Rated: fund scores are not yet available. | |
| Other securities | Preferred shares, exchange-traded notes and baby bonds, units, warrants, rights | Not Rated: the scores apply to common shares. | |
Inputs, sources and periods
All financial-statement figures come from companies' reported income statements, balance sheets and cash-flow statements as supplied by Financial Modeling Prep (FMP), and are stored with their period and filing date. Unless stated otherwise, income and cash-flow figures cover the trailing twelve months (TTM): the latest fiscal year plus the quarters reported since, less the same quarters a year earlier (or the latest four quarters when the annual report is not yet out). Where no usable quarter exists, the latest fiscal year is used instead, and the stock page labels which period a figure covers. Balance-sheet figures come from the balance sheet at the end of that period. Each quarter used must pass consistency checks before it is accepted (see Payout ratio and other fundamental ratios).
| Input | How it is calculated | Profiles | Period |
|---|---|---|---|
| Earnings payout (EP) | Common dividends paid ÷ (net income − preferred dividends) × 100 | Ordinary companies, utilities, insurers; banks on their own table (BEP) | TTM |
| Free-cash-flow payout (FP) | Common dividends paid ÷ (operating cash flow − capital expenditure) × 100 | Ordinary companies, utilities | TTM |
| Operating-cash-flow payout (OP) | Common dividends paid ÷ operating cash flow × 100 | REITs, MLPs | TTM |
| Net debt ÷ EBITDA (LEV) | (Total debt − cash and short-term investments) ÷ earnings before interest, taxes, depreciation and amortization. Withheld when the debt figure fails the debt data check | Ordinary companies, utilities, REITs, MLPs (each on its own table) | Debt and cash: latest balance sheet. EBITDA: TTM |
| Interest coverage (IC) | Earnings before interest and taxes (EBIT) ÷ interest expense. REITs and MLPs: EBITDA ÷ interest expense (on EBIT when EBITDA is not available) | All rated profiles except BDCs and banks | TTM |
| Earnings stability (ST) | Share of the fiscal years on record, the last five at most and at least three, with positive net income (REITs and MLPs: positive operating cash flow). A company with three years of statements, all profitable, scores the same as one with five. The newest fiscal year must have ended within the last two years | All rated profiles except BDCs | Last 5 fiscal years (annual statements) |
| Dividend record (R) | Years of uninterrupted regular dividends, and the dates of the latest dividend cut and suspension (see below) | All rated profiles | Full dividend history on record, through today |
| BDC debt ÷ equity (BDCL) | Total debt ÷ total equity (net assets). Zero or negative equity scores 0; withheld when the debt figure fails the debt data check | BDCs | Latest balance sheet |
| NAV per share trend (NAV) | Percentage change in net asset value per share between the latest fiscal year and three fiscal years earlier. NAV per share is total equity ÷ the weighted-average share count of the same fiscal year (the statements do not carry a period-end share count), restated for any stock split | BDCs | Last 3 fiscal years (annual statements) |
| 3-year earnings payout (EP3) | Total dividends paid ÷ total net income over the last three consecutive fiscal years × 100 (one ratio of the sums, so a single weak year does not distort it). A BDC's net income includes gains and losses on its investments; it stands in for net investment income, which is not in our data | BDCs | Last 3 fiscal years |
| Equity ÷ total assets (EA) | Total shareholders' equity ÷ total assets × 100 | Banks | Latest balance sheet |
| Return on assets (ROA) | Net income ÷ average total assets × 100, where average total assets is the mean of the balance sheet at the end of the period and the one about a year earlier (the period-end balance sheet alone if there is no earlier one) | Banks | Net income: TTM |
| Debt ÷ equity (DE) | Total debt ÷ total shareholders' equity. Zero or negative equity scores 0; withheld when the debt figure fails the debt data check | Insurers | Latest balance sheet |
Ratios are calculated in the currency the company reports in, so a foreign company's ratios do not depend on exchange rates. Some situations make a ratio meaningless, and the scoring tables below say how each is treated: a net loss scores 0 on earnings payout (for BDCs, a net loss over the three years combined); zero or negative free cash flow scores 0 on free-cash-flow payout; zero or negative operating cash flow scores 0 on operating-cash-flow payout; net cash (cash above total debt) scores 100 on leverage, and net debt with zero or negative EBITDA scores 0; zero or negative EBITDA scores 0 on a REIT's or MLP's interest coverage; no interest expense together with no debt scores 100 on interest coverage; and zero or negative shareholders' equity scores 0 on debt ÷ equity. Any other ratio that cannot be calculated, for example because a figure is missing from the statements, is treated as missing.
Debt data check. Data providers occasionally move most of a company's debt to another line of the balance sheet from one quarter to the next, which would make its leverage look far lower than it is. When a company's reported total debt is more than 60% below its level on any balance sheet of the previous 13 months while its total liabilities stay at 80% or more of that level, we treat the debt figure as unreliable: net debt, net debt ÷ EBITDA and debt ÷ equity are withheld for that balance sheet, and leverage counts as missing in the score. For the same reason, when total assets or shareholders' equity move by more than five times within about a quarter, every balance-sheet figure for that date is withheld.
Scoring tables
Each measure is turned into points from 0 to 100 using the fixed table shown for it. Between two listed values the points change in a straight line, and beyond the first or last listed value they stay at that row's points. For example, on a table that gives 100 points at 40% and 80 points at 60%, a value of 50% receives 90 points. The tables are the same for every security in a profile; they do not depend on how other securities score, except where a measure is explicitly compared with peers.
Payout
| Earnings payout ratio | Points |
|---|---|
| 40% or less | 100 |
| 60% | 80 |
| 80% | 50 |
| 100% | 20 |
| 150% or more | 0 |
| Net loss (no earnings to cover the dividend) | 0 |
| Free-cash-flow payout ratio | Points |
|---|---|
| 50% or less | 100 |
| 70% | 75 |
| 90% | 40 |
| 120% | 10 |
| 150% or more | 0 |
| Free cash flow zero or negative | 0 |
| Operating-cash-flow payout ratio | Points |
|---|---|
| 60% or less | 100 |
| 70% | 90 |
| 85% | 60 |
| 100% | 30 |
| 120% or more | 0 |
| Operating cash flow zero or negative | 0 |
Debt and interest
| Net debt ÷ EBITDA | Points |
|---|---|
| 1.0× or less | 100 |
| 2.0× | 85 |
| 3.0× | 60 |
| 4.0× | 35 |
| 6.0× | 10 |
| 8.0× or more | 0 |
| Net cash (net debt zero or below) | 100 |
| Net debt with EBITDA zero or negative | 0 |
| Net debt ÷ EBITDA | Points |
|---|---|
| 3.0× or less | 100 |
| 4.5× | 80 |
| 5.5× | 55 |
| 6.5× | 30 |
| 8.0× or more | 0 |
| Net cash (net debt zero or below) | 100 |
| Net debt with EBITDA zero or negative | 0 |
| Net debt ÷ EBITDA | Points |
|---|---|
| 5.0× or less | 100 |
| 6.0× | 75 |
| 7.5× | 40 |
| 9.0× | 10 |
| 10.0× or more | 0 |
| Net cash (net debt zero or below) | 100 |
| Net debt with EBITDA zero or negative | 0 |
| Net debt ÷ EBITDA | Points |
|---|---|
| 3.0× or less | 100 |
| 4.0× | 75 |
| 5.0× | 40 |
| 6.0× | 10 |
| 7.0× or more | 0 |
| Net cash (net debt zero or below) | 100 |
| Net debt with EBITDA zero or negative | 0 |
| Interest coverage | Points |
|---|---|
| 1× or less | 0 |
| 2× | 30 |
| 4× | 60 |
| 8× | 85 |
| 15× or more | 100 |
| No interest expense and no debt | 100 |
| Interest coverage before depreciation | Points |
|---|---|
| 1× or less | 0 |
| 2× | 30 |
| 4× | 60 |
| 8× | 85 |
| 15× or more | 100 |
| EBITDA zero or negative | 0 |
| No interest expense and no debt | 100 |
Earnings stability
| Share of the last 3 to 5 fiscal years with positive net income (REITs and MLPs: positive operating cash flow) | Points |
|---|---|
| 100% (for example 5 of 5, or 3 of 3) | 100 |
| 80% (4 of 5) | 70 |
| 60% (3 of 5) | 40 |
| 40% (2 of 5) | 15 |
| 20% or less (1 of 5, or none) | 0 |
| Fewer than 3 fiscal years of statements | Not available |
Shares between the listed values follow the same straight-line rule: two profitable years out of three (67%) score 50, and three out of four (75%) score 62.5.
BDC measures
| Debt ÷ equity | Points |
|---|---|
| 0.90× or less | 100 |
| 1.00× | 80 |
| 1.20× | 50 |
| 1.50× | 20 |
| 1.80× or more | 0 |
| Shareholders' equity zero or negative | 0 |
| Change in NAV per share | Points |
|---|---|
| −25% or less | 0 |
| −15% | 30 |
| −5% | 70 |
| 0% or more | 100 |
| Dividends paid ÷ net income, last 3 fiscal years combined | Points |
|---|---|
| 40% or less | 100 |
| 60% | 80 |
| 80% | 50 |
| 100% | 20 |
| 150% or more | 0 |
| Net loss over the 3 years combined | 0 |
Bank measures
| Earnings payout ratio | Points |
|---|---|
| 35% or less | 100 |
| 50% | 75 |
| 70% | 40 |
| 100% or more | 0 |
| Equity ÷ total assets | Points |
|---|---|
| 4% or less | 0 |
| 6% | 30 |
| 8% | 70 |
| 10% or more | 100 |
| Return on average assets | Points |
|---|---|
| 0% or less | 0 |
| 0.4% | 30 |
| 0.8% | 70 |
| 1.2% or more | 100 |
Insurer measures
| Debt ÷ equity | Points |
|---|---|
| 0.2× or less | 100 |
| 0.4× | 75 |
| 0.7× | 40 |
| 1.0× | 10 |
| 1.3× or more | 0 |
| Shareholders' equity zero or negative | 0 |
The dividend record and its caps
The dividend record (R) starts from the number of years of uninterrupted regular dividends: the time from the first regular payment in our records, or from the date payments resumed after the latest suspension, to the latest regular payment. It is zero while a suspension is still in progress. Specials and other one-off payments are not counted, and amounts are adjusted for stock splits.
| Years of uninterrupted regular payments | Points |
|---|---|
| 0 years | 10 |
| 2 years | 25 |
| 5 years | 50 |
| 10 years | 70 |
| 25 years | 90 |
| 40 years or more | 100 |
The points are then capped when the record shows a recent cut or suspension, counting back from today to the date of the event:
| Event | Dividend record points at most |
|---|---|
| A dividend cut within the last 10 years | 50 |
| A dividend cut within the last 3 years | 25 |
| A suspension within the last 10 years | 20 |
| A suspension within the last 3 years | 10 |
Where more than one cap applies, the lowest one is used. A cut that has been declared but takes effect after today counts as within the last three years. A cut is a decrease of 20% or more in the regular dividend rate, as recorded by our dividend engine: a regular payment at least 20% lower than the one before it (for semi-annual and annual payers, than the same payment a year earlier), after adjusting for splits. A lower per-share dividend after a spin-off counts as a cut when it is 20% or more lower. Smaller trims, changes caused by currency conversion and rounding of declared amounts are not cuts, and dividends that vary from payment to payment by design are not compared. A suspension is a gap with no regular payment longer than one and a half times the company's usual interval between payments; every suspension counts. Cuts and suspensions before 1990 are not evaluated, because data-provider histories from those years have frequent gaps. The dividend history on each stock page lists every change, including those smaller than 20%.
Weights by profile
Each profile's weights add up to 100. A dash means the measure is not used for that profile.
| Component | Ordinary companies | Utilities | REITs | BDCs | Banks | Insurers | MLPs |
|---|---|---|---|---|---|---|---|
| Earnings payout (EP) | 20 | 35 | not used | not used | not used | 30 | not used |
| Free-cash-flow payout (FP) | 25 | 5 | not used | not used | not used | not used | not used |
| Operating-cash-flow payout (OP) | not used | not used | 35 | not used | not used | not used | 35 |
| Leverage (net debt ÷ EBITDA, profile's own curve) (LEV) | 15 | 20 | 20 | not used | not used | not used | 25 |
| Interest coverage (IC) | 10 | 10 | 15 | not used | not used | 10 | 10 |
| Dividend record (R) | 20 | 20 | 20 | 25 | 25 | 25 | 20 |
| Earnings stability (ST) | 10 | 10 | 10 | not used | 15 | 20 | 10 |
| BDC debt ÷ equity (BDCL) | not used | not used | not used | 25 | not used | not used | not used |
| NAV per share trend (NAV) | not used | not used | not used | 25 | not used | not used | not used |
| 3-year earnings payout (EP3) | not used | not used | not used | 25 | not used | not used | not used |
| Bank earnings payout (BEP) | not used | not used | not used | not used | 30 | not used | not used |
| Equity ÷ total assets (EA) | not used | not used | not used | not used | 20 | not used | not used |
| Return on assets (ROA) | not used | not used | not used | not used | 10 | not used | not used |
| Debt ÷ equity (DE) | not used | not used | not used | not used | not used | 15 | not used |
| Total | 100 | 100 | 100 | 100 | 100 | 100 | 100 |
Leverage uses each profile's own table: ordinary companies the LEV table, utilities the utility table, REITs the REIT table and MLPs the MLP table.
Missing data and completeness
Every Safety Score is published with a completeness figure: the share of the score's total weight whose inputs were available for that security. When an input is missing, it is left out and the remaining weights are scaled up so that they again add to 100; a missing input is never treated as zero and never filled with an estimate. Completeness tells you how much of the formula actually had data behind it.
A score is published only when completeness is at least 60% and every required input is present. Otherwise the security shows Not Rated, with the reason.
Out-of-date statements are treated as missing. If the latest usable financial statements for a company cover a period that ended more than 15 months ago, every input that comes from them (payout ratios, leverage, interest coverage, growth in revenue and earnings, cash-flow yield) is treated as missing for scoring, so the score's completeness falls and it may be Not Rated. The stock page can still show those older figures, labelled with their fiscal year.
| Share of the score's weight with data | Label |
|---|---|
| 90% or more | Complete data |
| 75% to under 90% | Most data available |
| 60% to under 75% | Partial data |
| Under 60% | Not Rated |
Required inputs: the dividend record (R) and at least one measure of dividend coverage, that is, one of earnings payout (EP), free-cash-flow payout (FP), operating-cash-flow payout (OP), the BDC 3-year earnings payout (EP3) or the bank earnings payout (BEP), whichever the profile uses.
When a security is Not Rated
A security shows Not Rated, with the reason stored and shown, when any of these applies:
- It is a fund. ETFs, closed-end funds and fund or trust units: fund scores are not yet available. A fund's distributions depend on its holdings, its net asset value and, sometimes, return of capital, which these formulas are not built to assess.
- It is not a common share. Preferred shares, exchange-traded notes and baby bonds, units, warrants and rights: the scores apply to common shares. Payments on these securities are set by their terms (coupon, call date, ranking), which these measures do not capture.
- Its classification is incomplete. A security whose type, or whose issuer's kind of business, has not yet been classified cannot be assigned a profile, so it is not scored until it is.
- It is no longer covered. A security that has left our coverage keeps no current scores.
- It is not a current payer. It has paid no regular dividend in the last 12 months and has none declared and still to come; its only recent payments were one-off specials; its regular dividend has lapsed; its computed yield is treated as a likely data error; or a corporate action such as a spin-off makes its dividend record not comparable with today's shares. These are the same rules that decide whether a security shows a yield (see Yield calculation).
- An automated data check is holding it back. A check that marks one of its figures as likely wrong (shown as "Withheld" on our data quality page) withholds its scores until the check clears.
- A required input is missing. The dividend record, or every coverage measure the profile uses, is unavailable.
- Completeness is under 60%.
Score bands
The score is always shown as a number, with a short descriptive label. The labels describe the indicators; they do not grade the security or predict what its dividend will do.
| Score | Label shown with the score |
|---|---|
| 80 to 100 | Very strong indicators |
| 60 to 79 | Strong indicators |
| 40 to 59 | Mixed indicators |
| 20 to 39 | Weak indicators |
| 0 to 19 | Very weak indicators |
Worked example
Illustrative only
The company below is hypothetical. Its figures are made-up round numbers chosen to show the arithmetic; they do not describe any real company.
A hypothetical ordinary company has an earnings payout of 50%, a free-cash-flow payout of 60%, net debt of 2.5 times EBITDA, interest coverage of 6 times, profits in each of the last five fiscal years and 25 years of uninterrupted dividends with no cut or suspension. An earnings payout of 50% lies halfway between the table's 40% (100 points) and 60% (80 points), so it scores 90; the other inputs are read the same way.
| Component | Hypothetical input | Points | Weight | Points × weight ÷ 100 |
|---|---|---|---|---|
| Earnings payout (EP) | 50% | 90.0 | 20 | 18.00 |
| Free-cash-flow payout (FP) | 60% | 87.5 | 25 | 21.88 |
| Leverage (net debt ÷ EBITDA) (LEV) | 2.5× | 72.5 | 15 | 10.88 |
| Interest coverage (IC) | 6× | 72.5 | 10 | 7.25 |
| Dividend record (R) | 25 years uninterrupted | 90.0 | 20 | 18.00 |
| Earnings stability (ST) | 5 of 5 years profitable | 100.0 | 10 | 10.00 |
| Total | 100 | 86.00 |
The weighted points add up to 86.00, so the Safety Score is 86.0, "Very strong indicators", completeness 100% ("Complete data").
If an input is missing. Suppose the same company's free-cash-flow payout were not available. That component is left out, and the remaining weights (75 of 100) are scaled back up to 100:
| Component | Hypothetical input | Points | Weight | Points × weight ÷ 100 |
|---|---|---|---|---|
| Earnings payout (EP) | 50% | 90.0 | 20 | 18.00 |
| Free-cash-flow payout (FP) | Not available | Missing | 25 | Left out |
| Leverage (net debt ÷ EBITDA) (LEV) | 2.5× | 72.5 | 15 | 10.88 |
| Interest coverage (IC) | 6× | 72.5 | 10 | 7.25 |
| Dividend record (R) | 25 years uninterrupted | 90.0 | 20 | 18.00 |
| Earnings stability (ST) | 5 of 5 years profitable | 100.0 | 10 | 10.00 |
| Total | 75 | 64.12 |
Score: 64.12 ÷ 75 × 100 = 85.5, "Very strong indicators", completeness 75% ("Most data available").
If the dividend was cut. Suppose instead the company had cut its regular dividend by 25% two years ago. Its record would still earn 90 points on years of payments, but a cut of 20% or more within three years limits it to 25:
| Component | Hypothetical input | Points | Weight | Points × weight ÷ 100 |
|---|---|---|---|---|
| Earnings payout (EP) | 50% | 90.0 | 20 | 18.00 |
| Free-cash-flow payout (FP) | 60% | 87.5 | 25 | 21.88 |
| Leverage (net debt ÷ EBITDA) (LEV) | 2.5× | 72.5 | 15 | 10.88 |
| Interest coverage (IC) | 6× | 72.5 | 10 | 7.25 |
| Dividend record (R) | 25 years uninterrupted; regular dividend cut by 25% two years ago (cap: 25) | 25.0 | 20 | 5.00 |
| Earnings stability (ST) | 5 of 5 years profitable | 100.0 | 10 | 10.00 |
| Total | 100 | 73.00 |
Score: 73.0, "Strong indicators".
Updates and versioning
The Safety Score is recalculated every day in our morning data refresh, before the U.S. market opens, from the latest stored inputs. Each input is only as fresh as the data it comes from: prices, the dividend calendar and newly declared dividends refresh daily; financial statements refresh weekly, so a newly published quarterly report usually reaches the score within about a week of our data provider publishing it. The full schedule is on the methodology page, and the last refresh of each data set is shown on our data quality page. A daily snapshot of every score is kept, so changes over time can be traced.
The formula version in use is 2026-10-19.4, introduced on October 19, 2026. The version is stored with every Safety Score, and any change to a curve, weight, rule or input bumps it. Each change is listed here with its date, so a score can always be matched to the formula that produced it. Scores calculated under different versions are not directly comparable.
| Version | Date | Change |
|---|---|---|
| 2026-10-19.4 | October 19, 2026 | Financial statements whose period ended more than 15 months ago are no longer scored: the score treats them as missing, so its completeness falls and it may be Not Rated. Dividend-record fixes: a stock split dated on or the day before an ex-date no longer reads as a dividend cut when the payment was already quoted in post-split shares, and a switch from quarterly to monthly payments no longer reads as a cut. |
| 2026-10-19.3 | October 19, 2026 | REITs and MLPs: interest coverage measured on EBITDA (before depreciation). Banks: revenue growth no longer used in the Growth Score, because the revenue reported for banks is mostly gross interest income. S.A.F.E. Solid now requires a Safety Score of 80 or higher (was 70), because most U.S.-listed common stocks scored above 70. |
| 2026-10-19.2 | October 19, 2026 | Methodology review: a dividend cut counts against the dividend record only when the regular rate falls by 20% or more; earnings stability measured as a share of the years available, so a short history is not capped; earnings per share that is negative at the end of three years scores 0 instead of being left out; REITs and MLPs no longer fall back to revenue for earnings growth; the operating-cash-flow yield table starts from 0; insurers valued on book value like banks; BDCs valued on yield history and price to net asset value only; negative equity scores 0 on debt to equity; new Value Score labels. |
| 2026-10-19.1 | October 19, 2026 | First version of the Dividend Safety, Dividend Growth and Dividend Value Scores. DividendRank becomes the published composite of the three scores, replacing the earlier formula (yield, payout ratio, return on equity, price-to-book and length of payment history). The S.A.F.E. Solid check uses the Dividend Safety Score instead of DividendRank. |
Validation
Validation: a point-in-time test of the Safety Score against later dividend cuts is in progress; results will be published here when complete.
The test will compute the score as it would have stood at past dates, using only data available at each date, and compare it with the dividend cuts and suspensions that followed. Until results are published, no claim is made about how well any score has anticipated dividend changes.
Known limitations
- Stand-in measures. REITs and MLPs are measured on operating cash flow instead of FFO, AFFO or distributable cash flow; BDCs on reported net income, which includes investment gains and losses, instead of net investment income; banks on equity ÷ total assets instead of regulatory capital ratios. These industry measures are not in our data. Credit ratings are not used.
- The tables and weights are fixed judgments. The thresholds and weights are Dividendly's own choices, set in advance; they have not been fitted to past dividend cuts. Whether they separate stronger from weaker dividend support is what the validation will test.
- Reported figures lag. The score reads the latest reported statements, which describe a period that has already ended. A company can announce a cut between reports, and a cut takes effect in the score only once it appears in the dividend record.
- Some gaps are left out, not scored. A ratio that cannot be calculated and has no rule of its own in the tables above (for example because a figure is missing from the statements, or because the debt figure failed the debt data check) is left out rather than given 0 points. The score then rests on fewer measures, and its completeness shows this.
- Small trims do not count as cuts. Only a decrease of 20% or more in the regular rate caps the dividend record, so a company that trims its dividend by less keeps its full record points.
- Records have limits. The dividend record reaches back only as far as our data provider's history, and cuts and suspensions before 1990 are not evaluated. A spin-off that lowers the per-share dividend by 20% or more counts as a cut.
- One statements provider. Statement figures come from one data provider. They are checked for internal consistency and partly cross-checked against a second provider, but an error in the source can reach the score until it is caught. Report suspected errors through our error-report form.
- Not everything that matters is measured. Management's dividend policy and guidance, debt maturities and covenants, regulatory limits on payouts, pending transactions and industry conditions are not part of the score.
Related pages
- Methodology overview: yields, specials, growth and streaks, payout ratios, classification and refresh schedule
- Dividend Growth Score
- Dividend Value Score
- DividendRank and S.A.F.E. checks
- Data sources and data quality and corrections
- Editorial policy and disclaimers
- Found a figure that looks wrong? Report an error.
Research only. Dividendly's scores describe securities, not people: they are produced by the published formulas on these pages and are the same for every visitor. They are not investment advice and not a recommendation to buy, sell or hold any security. Data may be delayed, incomplete or wrong; see our disclaimers.