preferred dividend coverage

Preferred dividend coverage

Net income after interest and taxes (before common stock dividends) divided by preferred stock dividends.

Preferred Dividend Coverage Ratio

A measure of a publicly-traded company's ability to pay dividends to preferred stockholders. It is calculated by taking the company's net income and dividing it by the total preferred dividends it must pay. A ratio over 1 indicates that the company is able to make dividend payments, while a ratio below 1 indicates that it cannot. The preferred dividend coverage ratio is particularly important because dividends to preferred stockholders are set and guaranteed. Failure to pay them can be highly detrimental to the company because preferred stockholders, under some circumstances, can force its liquidation to receive back dividends.

preferred dividend coverage

The measure of a firm's ability to meet its dividend obligations on preferred stock. The greater the coverage the less the chance that management will pass a dividend. This ratio is calculated by dividing earnings before taxes and fixed charges by fixed charges plus preferred dividends (divided by one minus the firm's tax rate).
References in periodicals archive ?
The company's ratings could be lowered if it does not achieve a preferred dividend coverage ratio of at least 3.
Fitch's affirmation of ACGL's ratings reflects the company's consistently strong run rate profitability, low financial leverage, strong interest and preferred dividend coverage and well managed reserve risk.
ReliaStar's strong dividend paying characteristics result in solid fixed-charge and preferred dividend coverage in the 6.
ENH's GAAP operating earnings-based interest and preferred dividend coverage has been strong, averaging 6.
The reaffirmation of American General Corporation's (AGC) 'AA-' (Double-A- Minus) senior debt rating, 'A' (Single-A) preferred stock rating and 'D-1+' (D-One-Plus) commercial paper rating is based on the diversification of earnings, consistent and solid cash flows from operating subsidiaries, and fixed-charge and preferred dividend coverage in the 5.
Operating earnings-based interest and preferred dividend coverage (excluding net gains and losses on investments) has been very low in recent years as operating earnings have declined with weaker underwriting results and high catastrophe losses.
Rationale for the ratings includes HSB Group's dominant market share in the boiler and machinery and equipment breakdown insurance market, excellent underwriting results, and good liquidity and fixed charge and preferred dividend coverage.
At June 30, 2012 GWO's financial leverage was 22% and GAAP earnings-based interest and preferred dividend coverage was approximately 6 times (x).
Pro forma fixed charges and preferred dividend coverage will remain at or above 6 times.
HFSG's operating earnings-based interest and preferred dividend coverage has been reduced in recent years, averaging a low 3.
DCR's ratings reflect Delphi`s subsidiaries' strong market niches in group life, long-term disability and excess workers' compensation, its continually improving product diversification, consistently strong earnings' from core products, and strong fixed-charge and preferred dividend coverage.
Fitch's rationale for the affirmation of ACGL's ratings reflects the company's consistently strong run rate profitability, low financial leverage, strong interest and preferred dividend coverage and well managed reserve risk.