I am looking at investing in a few companies which offer preferred stock. Do their dividend coverage ratios factor in the dividends being paid to preferred shareholders? If not, how can I find or determine an 'adjusted dividend coverage ratio' that includes preferred stock? Thank you.
Dividend Coverage Ratio is calculated as the total net income minus any required preferred dividend, divided by the amount of the dividend. It can also be calculated as EPS/DPS, where EPS is net income minus preferred dividends.
So, yes, they factor in the dividends being paid to preferred shareholders.