Thread by @alphaspotcap

4 Ratios you should look into while analysing Dividend stocks-

A thread 🧵 👇🏻
#investing #finance

(1/6)

Dividend stock ratios are used by investors & analysts to evaluate the dividends a company might pay out in the future. Dividend payouts depend on many factors such as a company's debt load; its cash flow; its earnings; or its dividend payout history.

(2/6)

The four most popular ratios are-

1. Dividend Payout Ratio-

It is calculated by dividing total dividends by net income.

It indicates the portion of a company's annual earnings per share that the organization is paying in the form of cash dividends per share.

(3/6)

2.Dividend Coverage Ratio-

The dividend coverage ratio is calculated by dividing a company's annual EPS by its annual DPS.
It indicates the no of times a company could pay dividends to its shareholders using its net income over a specified fiscal period.

(4/6)

Free Cash flow to Equity

It measures the amount of cash that could be paid out to shareholders after all expenses & debts have been paid. The FCFE is calculated by subtracting net capital expenditures, debt repayment&change in net working capital from NI & adding net debt

(5/6)

4. Net Debt to EBITDA Ratio-

It is calculated by dividing total liability less cash by its EBITDA. It measures a company's leverage & its ability to meet its debt. A lower ratio is more attractive. If this ratio has been rising, the co. may cut its dividend in the future

(6/6)

What other dividend focused ratios will you look into while analysing a high dividend paying stock?
@caniravkaria @iamrakeshbansal @kuttrapali26 @safiranand @ValueEducator @aditya_kondawar

Comment down below!👇🏻