Introduction
Following the turmoil striking the global economy, it comes as little surprise that analysts are warning that CVR Energy (CVI), whose dividend yield is currently sitting near a massive 18%, is at risk of reducing their dividend. Even though a dividend reduction seems widely expected, analyzing their situation can still provide insights regarding their prospects to reinstate their dividend once conditions recover.
Dividend Coverage
When assessing dividend coverage, I prefer to forgo using earnings per share and use free cash flow instead, since dividends are paid from cash and not from “earnings”.