Dividend cover is earnings per share divided by the dividend per share. Earnings of 60p against a 30p dividend is cover of 2×: this year's profit could have paid this year's dividend twice. It's the payout ratio turned upside down — a 50% payout is 2× cover, 80% is 1.25×, and a payout over 100% is cover below 1×, meaning the dividend is bigger than the profit behind it.
Why 2×? Because at 2× profit can halve and still pay the dividend in full. It's a rule of thumb from UK reporting, not a law, and steady businesses often run thinner. Every cover ratio works the same way — something available divided by something owed — so always check what sits on top. The app's Div Cover — in a holding's detail (on the web, under the Fortress Builder profile) and in the Dividend Safety widget — is worked out as 1 ÷ payout ratio, so it tells you nothing the payout ratio doesn't; it's the same fact in the form many UK reports use.
Earnings could halve and still pay it. Below 1×, the money is coming from somewhere else.
Educational content only. It is not personal financial advice.