Is My Dividend Safe?
Check payout ratio, free cash flow coverage, and cut-risk rating in seconds. Free — no account required.
Inputs
Enter Annual Dividend Per Share and EPS to see results
How the Safety Score Works
The Dividend Safety Score (0–100) is a composite of two metrics:
Payout Ratio (55%)
Dividends ÷ EPS. Below 50% is safe for most sectors. Above 80% leaves almost no buffer for an earnings miss.
FCF Coverage (45%)
FCF Per Share ÷ Dividend Per Share. Above 1.5× is adequate; below 1.0× means cash flow does not cover the dividend.
When FCF is not provided, payout ratio carries 80% weight with a neutral FCF placeholder. Providing FCF per share significantly improves accuracy — especially for capital-intensive businesses.
Payout Ratio Benchmarks by Sector
| Sector | Typical Payout | Context |
|---|---|---|
| REITs | 80–95% | Required by law to distribute 90%+ of taxable income; use FFO payout ratio instead |
| Utilities | 60–75% | Regulated cash flows; high payout sustainable due to predictable earnings |
| Consumer Staples | 45–65% | Stable cash flows; Dividend Aristocrats common in this range |
| Financials (Banks) | 35–55% | Supplemented by buybacks; heavily influenced by regulatory capital requirements |
| Health Care | 30–50% | Large pharma; biotech typically pays no dividend |
| Industrials | 30–50% | Capital reinvestment competes with dividends; moderate payouts common |
| Energy (Integrated) | 30–55% | Cyclical; payout varies with oil price; some majors target variable+base |
| Technology | 20–35% | Mature giants only (MSFT, AAPL, TXN); most tech pays nothing |
| Consumer Discretionary | 20–40% | Growth focus; dividend payers uncommon except retail incumbents |
| S&P 500 Median | ~35–40% | Broad market baseline; above 60% warrants scrutiny in most sectors |
Screen 3,000+ stocks for dividend safety
Full dividend screener — sorted by safety score
Equity Rank tracks payout ratios, FCF coverage, and dividend yield across the S&P 500 and Russell 1000 — updated daily. Filter by sector, yield range, and safety tier.
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Common Questions
What is a dividend payout ratio?
The payout ratio is annual dividends per share divided by earnings per share (EPS), expressed as a percentage. It tells you what fraction of a company's profits are returned to shareholders as dividends. A ratio of 40% means 40 cents of every dollar earned goes to dividends; 60 cents is retained or used for buybacks and reinvestment.
What payout ratio is safe?
For most sectors, a payout ratio below 60% is considered sustainable. Below 50% is generally safe and leaves room for dividend growth. Above 75%, a single earnings miss can push the company into paying out more than it earns, which typically leads to a cut. REITs are an exception — they must distribute 90%+ of taxable income by law and are evaluated on FFO payout ratio instead.
What is FCF dividend coverage?
Free cash flow (FCF) coverage = FCF per share ÷ dividend per share. This is often more reliable than the earnings-based payout ratio because FCF is harder to manipulate and reflects actual cash generation. A coverage ratio above 1.5x is generally safe; below 1.0x means the company is paying out more in dividends than it generates in free cash flow, which is unsustainable unless offset by asset sales or debt.
How is the Dividend Safety Score calculated?
The Dividend Safety Score (0–100) is a composite of the payout ratio (55% weight) and FCF coverage ratio (45% weight) when FCF data is provided. When FCF is omitted, 80% weight goes to payout ratio with a neutral placeholder for FCF. A score of 75+ is rated Very Safe; 60–74 is Low Risk; 45–59 is Moderate Risk; 30–44 is Elevated Risk; below 30 is High Risk.
What does a high dividend yield signal?
A yield that is significantly above the sector average can signal two very different things: (1) a genuinely high-paying business (utilities, midstream energy, REITs) whose model supports above-average distributions, or (2) a falling knife — a stock whose price has dropped sharply because the business is deteriorating, making the yield appear high even as a cut becomes likely. Always check the payout ratio and FCF coverage before relying on yield alone. This is called a dividend yield trap.
How does Equity Rank track dividend safety in the screener?
Equity Rank stores dividend yield, EPS, and operating cash flow data for 3,000+ stocks. The full screener surfaces dividend yield alongside payout context and sector benchmarks. For deeper dividend analysis on individual stocks, the AI analyst tab provides a qualitative assessment of dividend sustainability backed by the company's actual financial statements.