Keyword: Preferred Dividends

are the dividends paid out on a stock’s preferred shares. Preferred Dividend Coverage is a nice measure of the long-term buoyancy of a company’s financial resources. It is net income after interest and taxes (but before common stock dividends) divided by the dollar amount of preferred stock dividends. The result indicates how many times over the preferred dividend requirement is covered by current earnings. (See also Common Dividends and Total Dividends.)