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The ratio of a company's earnings for equity to its dividends to ordinary shareholders. A company with high dividend cover may be retaining most of its profits to invest in expansion, leading to future growth in dividends, or it may be building up financial reserves or paying off debt to safeguard its ability to keep up dividends if business conditions become less profitable. A company with low or negative dividend cover may be a poor growth prospect, or a poor risk in a recession.

Subjects: Economics.


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