Dividend Safety Score

TrackYourDividends’ proprietary measure of a company’s likelihood to continue to pay and grow their dividend in the future.  Good companies that you can buy and hold forever are the cornerstone to a strong dividend portfolio. 

Focus on the Dividend Stream

Selecting the right dividend payers can supply consistent, growing payments each and every year. The TYD Dividend Safety Score gives you an easy way to evaluate your holdings. 

We want to separate the financially stable, dividend-focused companies from those with the highest risk. 

Ask yourself:
How large is it?
How safe is it?

How fast is it growing?

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5 Critical Dividend Safety Components


Payout Ratio

Definition: The percentage of a corporation’s net income that is paid out in dividends.
Dividends come from earnings.  The percentage of those earnings the company pays is an indicator of their commitment to dividends.  Of course, too large of a payout makes continued growth risky and cuts likely if earnings decline.


Consecutive Payment Growth

Definition: The total consecutive years a company has increased its dividend payment
Impact: HIGH
Why?  Nothing points to dividend safety like a recent increase.  A pattern of consecutive increases highlights a company’s commitment making annual, growing payments.


Dividend Growth Rate

Definition: The percentage increase of the dividend payment over the previous 5 years
Impact: Medium
Why? A growing payment helps keep up with inflation and demonstrates a devotion to dividends.


EPS Trend

Definition: Earnings per share growth measured over the previous 5 years
Impact: Medium
Why?  Growing sales, and more importantly, profit, will allow a company to continue to pay their regular dividend and potentially increase it.


Dividend Yield

Definition: Annual dividend payment divided by the current market price
Impact: Low
Why?  Simply paying a dividend puts a company ahead of its competition with no payments. Without dividends, stocks are little more than a piece of paper.

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