Can you count on Tate & Lyle's dividend payment?

The Tate & Lyle (LON:TATE) share price has given back some ground after a strong run recently, and the food ingredients company now yields a forecast 4.21% dividend - but how well covered is this dividend?

Dividend cover is the inverse of the dividend payout ratio. Dividend cover of two times or above is strong. Anything below one and a half times - as is the case for Tate & Lyle - should be stirring us to investigate in more detail.

Calculating Tate & Lyle’s dividend cover ratio 

A low level of dividend cover means that a small decline in earnings could consign your dividend payment to the scrap heap. It happens all the time. With that in mind, let’s take a look at Tate & Lyle’s dividend cover.

We can get all the information we need to see if Tate & Lyle has an adequate level of dividend cover from the group’s StockReport. The group’s FY19 earnings per share were 38.6p and its FY19 dividend per share was 29.4p. 

Divide the former by the latter and we get a trailing twelve-month dividend cover for Tate & Lyle of 1.31. This is below the 1.5 times cover limit that marks the point at which we should do some further digging on dividend sustainability and safety.

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