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 ?
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.
ENH's GAAP operating earnings-based interest and preferred dividend coverage has been strong, averaging 6.
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.
At June 30, 2012 GWO's financial leverage was 22% and GAAP earnings-based interest and preferred dividend coverage was approximately 6 times (x).
HFSG's operating earnings-based interest and preferred dividend coverage has been reduced in recent years, averaging a low 3.
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.
At March 31, 2012 GWO's financial leverage was 23% and GAAP earnings-based interest and preferred dividend coverage was approximately 6x.
The industry's interest and preferred dividend coverage on an operating basis (excluding AIG) declined significantly to 4.
Fitch's rationale for the affirmation of ACGL's ratings reflects the company's consistently strong run rate profitability, low financial leverage and historically strong interest and preferred dividend coverage and well managed reserve risk.
On a pro forma basis, Fitch estimates PartnerRe's equity-credit-adjusted ratio of debt plus preferred shares-to-total capital at approximately 14% and the company's run-rate interest plus preferred dividend coverage ratio to remain in the mid-to high single digits.
On a pro forma basis Fitch estimates Endurance's equity-credit-adjusted ratio of debt plus preferred shares-to-total capital at approximately 17% and the company's run-rate interest plus preferred dividend coverage ratio in the mid-single digits.
Further recovery in investment portfolios and continued benefits from favorable prior period reserve development contributed to improved interest and preferred dividend coverage levels.