Dividend limitation

Dividend limitation

A bond convenant that restricts in some way the firm's ability to pay cash dividends.

Dividend Limitation

A provision in some bond indentures placing a maximum amount on what a company can pay out in dividends. A dividend limitation reduces the risk that the issuer will default on a bond because it foolishly decides to pay out too much in dividends to common shareholders. This provision is designed to protect bondholders but has the possibility to scare away potential stockholders.
References in periodicals archive ?
Currently, the most restrictive dividend limitation is from a February 2006 PUCN financing order that restricts the combined dividends from NPC and SPPC to the amount of SRP's debt service.
In addition, we have eliminated the potential dividend limitation that might otherwise have applied beginning in 2004.
The most restrictive dividend limitation currently is from a February 2006 PUCN financing order that restricts the combined dividends from NPC and SPPC to the amount of SRP's debt service.
Fitch IBCA believes that GATX Capital's capitalization will remain solid in future periods due to management's operating philosophy, as well as dividend limitation and minimum net worth covenants in its committed bank revolver.
These actions are believed necessary and appropriate to conserve capital due to changing regulatory requirements and the Company's Dividend Limitation Agreement with the OTS.
Specifically, any declaration of future cash dividends will depend upon a number of factors, including the Bank's future earnings, financial condition, cash needs, general business conditions and dividend limitations imposed by law.
Somewhat constraining the parent company's financial flexibility are operating company dividend limitations in Wisconsin, which are more restrictive than in other states.
Customary covenants apply to the term loan, including maximum total leverage, interest coverage, capital expenditure limits, stock repurchase and dividend limitations and standard restrictions on investments and mergers and acquisitions.
Fitch believes that maintaining assets at the holding company is prudent given the restrictive dividend limitations for insurance companies.
Fitch believes that maintaining assets at the holding company is prudent given the more restrictive dividend limitations for New York-domiciled companies.
With respect to such dividend limitations, the capital plan contemplates payment of cash dividends on the new preferred stock that would be issued in the proposed recapitalization.
Accordingly, the group has agreed to adhere to certain additional reporting requirements and to dividend limitations and has filed a plan with the Texas Department of Insurance.