Dividend Safety Score Calculator
Enter four financial metrics for any stock and get an instant colour-coded safety score — with a breakdown of exactly which factors are safe, at risk, or dangerous.
Dividends paid ÷ net earnings × 100
Dividends paid ÷ free cash flow × 100. Overrides earnings payout if provided.
Total net debt divided by annual EBITDA
Direction of earnings per share over the last 2–3 years
How many years has the dividend been maintained or grown?
How the score is calculated
The score combines four factors: payout ratio (35%), net debt / EBITDA (30%), EPS growth trend (20%), and consecutive dividend streak (15%). Each factor is rated green, amber, or red against published thresholds. A weighted average produces the final 0–100 score. If FCF payout ratio is provided it overrides the earnings payout ratio in the calculation.
Frequently Asked Questions
- What payout ratio is considered safe for dividends?
- A payout ratio below 50% is generally considered safe for most sectors. Between 50–70% warrants monitoring; above 80% is a warning sign. REITs and utilities are exceptions — they often sustain higher payout ratios due to stable cash flows.
- How does debt level affect dividend sustainability?
- High debt increases the risk that a company will cut its dividend to preserve cash during downturns. A Net Debt/EBITDA ratio below 2× is comfortable; above 4× suggests the dividend is competing with debt servicing for every euro of cash flow.
- What is a good dividend safety score?
- Scores of 75–100 (Safe) indicate all key metrics are well within healthy ranges. Scores of 50–74 (Watch) suggest at least one area deserves attention. Below 50 (At Risk / Danger) means multiple warning signs are present — further research is essential before trusting the dividend.
- Can a company with high payout ratio still be safe?
- Yes — if the free cash flow payout ratio is much lower than the earnings payout ratio, the dividend may be very secure despite the surface-level number. This is common when companies have high non-cash charges (depreciation). Always check FCF when EPS payout looks high.
- What warning signs predict a dividend cut?
- The most reliable predictors are: payout ratio above 90%, FCF payout above 100%, declining EPS for 2+ consecutive years, debt/EBITDA above 4×, and dividend streak under 3 years. The presence of two or more of these simultaneously dramatically increases cut probability.