Is This Dividend Safe?
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A high yield is not the same as a safe yield. Equity Rank surfaces payout ratio, free cash flow coverage, and cut-risk rating for 30,000+ dividend-paying stocks — no manual spreadsheet required.
Dividend safety tools
Dividend Safety Check
Enter payout ratio, FCF, and earnings data — get a cut-risk rating in 10 seconds. Covers five risk tiers from "Very Safe" to "High Risk".
Dividend Yield Calculator
Calculate trailing and forward dividend yield, compare to sector averages, and see if a high yield is sustainable or a value trap.
Quick calculator
Payout Ratio Checker
Enter both values to calculate
For payout per share: use annual DPS and EPS. For aggregate: use total dividends paid and net income. REITs: substitute FFO for net earnings.
The three metrics that determine dividend safety
Most dividend research stops at yield. Yield tells you nothing about sustainability. These three metrics do.
Payout ratio
Annual dividends / net earnings. Below 60% for most sectors is low risk. Above 85% is a cut flag. REITs are the exception — use FFO instead of net earnings.
FCF dividend coverage
Free cash flow / total dividends paid. Above 1.5x means the company generates 50% more cash than it distributes. Below 1.0x, the company is funding dividends from debt — unsustainable.
Earnings trend
A rising payout ratio is not always a problem — if earnings are declining and the dividend stays flat, the ratio rises mechanically. Falling EPS with a payout ratio above 70% is the combination that historically precedes cuts.
Payout ratio benchmarks by sector
"Safe" varies by industry. Utilities can sustain higher payouts than tech because revenue is regulated. Use these as starting thresholds — combine with FCF coverage for a complete picture.
* REITs use FFO (funds from operations) instead of GAAP net earnings. MLPs use distributable cash flow.
Frequently asked questions
What is a healthy dividend payout ratio?+
Below 60% is a good general benchmark. Consumer staples and utilities can sustain 60–80% due to stable cash flows. Technology companies typically target 0–30%. REITs are structured differently — use FFO-based payout and 60–80% is normal. Any payout above 100% means dividends exceed earnings — a near-term cut risk.
How do I check if a dividend is safe?+
Three checks: (1) payout ratio below 60–70%, (2) FCF coverage above 1.5x, (3) stable or growing earnings over the last 3 years. Use our dividend safety check tool to calculate all three simultaneously and get a cut-risk rating.
Can dividends be cut even when the yield looks high?+
A high yield is often the market's way of signaling a likely cut. When a stock falls while its dividend stays flat, yield rises mechanically. If FCF coverage is below 1.0x or the payout ratio is above 90%, treat the elevated yield as a warning sign rather than an opportunity.
What is FCF dividend coverage and why does it matter?+
FCF dividend coverage = free cash flow ÷ total dividends paid annually. A ratio above 1.5x means the company is generating 50% more cash than it distributes — comfortable. Below 1.0x, dividends are being funded by debt or asset sales, which is not sustainable long-term.
What payout ratio signals a dividend cut risk?+
For most non-REIT sectors: below 60% = low risk, 60–75% = moderate caution, 75–85% = elevated risk, above 85% = high risk. Pair payout ratio with FCF coverage for a complete safety picture — a 90% payout ratio with strong FCF is less dangerous than an 80% payout on declining free cash flow.
Dividend screening in the Equity Rank screener
The full stock screener surfaces dividend yield, payout ratio, and analyst consensus alongside 19 valuation model outputs and the SAVE Score. Sort and filter 870+ stocks in seconds — no CSV export, no spreadsheet.
Dividend yield
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Payout ratio
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SAVE Score
0–100 safety composite
Margin of safety
Consensus fair value %
870+ stocks. 19 valuation methods. Dividend data included.
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