The 10-Point Dividend Verification Checklist
10-point dividend verification checklist with data sources
| # | Check | What to Look For | Where to Find It |
|---|---|---|---|
| 1 | Payout ratio | Below 65% for non-REITs; below 85% FFO for REITs | Morningstar, company financials |
| 2 | Dividend history | 10+ years of consecutive payments; 5+ of growth | Simply Safe Dividends, company IR page |
| 3 | Free cash flow coverage | FCF covers dividends by 1.3x minimum | Cash flow statement |
| 4 | Revenue trend | Growing or stable last 3 years | Income statement |
| 5 | Debt-to-EBITDA | Below 3x for most sectors; 5-6x acceptable for utilities | Balance sheet |
| 6 | Dividend growth rate | Historical 5-year average | Dividend history page |
| 7 | Sector concentration | No more than 30% in any single sector in your portfolio | Your holdings overview |
| 8 | Business model durability | Is the core business model under secular threat? | Industry analysis |
| 9 | Management commentary | What did CEO say about dividend in last 2 earnings calls? | Earnings call transcripts |
| 10 | Valuation vs. history | Is current yield at or above the 5-year historical average? | Historical yield chart |
For a rapid screen before deep research: check payout ratio (below 65%), dividend history (10+ years), and current yield vs. 5-year average (at or above average = potential value; well below average = potentially overpriced). These three checks eliminate most yield traps in under 3 minutes.
Applying the Checklist: A Real Example
Realty Income (O) check in 2025: Payout ratio (FFO basis): 76% ✓. Dividend history: 30+ consecutive years of monthly dividends, 25+ years of increases ✓. FCF coverage: 1.4x ✓. Revenue trend: growing ✓. Debt: 5.8x EBITDA — elevated but typical for net lease REITs ✓ with caveat. Dividend growth: 4% annually ✓. Result: passes 9/10 checks; debt is elevated but within REIT norms. Qualified buy.
Checklist application: Realty Income vs. AT&T before AT&T’s 2022 dividend cut
| Check | Realty Income (O) Score | AT&T (T) Score (2021) |
|---|---|---|
| Payout ratio | ✓ 76% FFO | ✗ 95%+ EPS |
| Dividend history | ✓ 30+ years | ✓ 30+ years (then cut) |
| FCF coverage | ✓ 1.4x | ✗ Below 1.0x |
| Revenue trend | ✓ Growing | ✗ Declining (media spinoff) |
| Debt-to-EBITDA | ✓ 5.8x (REIT norm) | ✗ 8x+ (non-utility) |
| PASS/FAIL | PASS | FAIL — should have been sold |
Annual Re-Verification for Existing Holdings
Apply the same checklist to existing holdings once per year. Payout ratios drift upward when earnings decline; debt rises with acquisitions; management changes; secular pressures intensify. A holding that passed the checklist 3 years ago may fail today. Annual re-verification is the maintenance work of a dividend portfolio.
Project Income From Your Verified Holdings
After completing your checklist, enter verified holdings into the calculator to see your reliable income projection.