Bull Score Methodology
The Bull Score is DividendBull's proprietary rating system that evaluates the reliability and sustainability of a company's dividend. It combines six fundamental factors into a single 0–100 score with a letter grade.
How It Works
Scoring Factors
1. Payout Ratio
25 pts maxMeasures what percentage of earnings a company pays out as dividends. A lower payout ratio suggests the company retains enough earnings to sustain and grow the dividend. Companies paying out less than 40% of earnings score the highest, while those paying more than 90% score near zero.
| Threshold | Points |
|---|---|
| < 30% | 25 |
| 30–50% | 20 |
| 50–70% | 15 |
| 70–90% | 8 |
| > 90% | 2 |
2. Dividend Streak
25 pts maxTracks the number of consecutive years a company has maintained or increased its dividend. A long streak signals management commitment to shareholder returns and financial consistency. Dividend Aristocrats (25+ years) and Dividend Kings (50+ years) score the highest.
| Threshold | Points |
|---|---|
| 25+ years | 25 |
| 15–24 years | 20 |
| 10–14 years | 15 |
| 5–9 years | 10 |
| 1–4 years | 5 |
| 0 years | 0 |
3. Debt-to-Equity
15 pts maxEvaluates the company's financial leverage. Lower debt levels provide a greater margin of safety for dividend payments during economic downturns. Companies with debt-to-equity below 0.5 are considered conservatively financed.
| Threshold | Points |
|---|---|
| < 0.5 | 15 |
| 0.5–1.0 | 12 |
| 1.0–1.5 | 9 |
| 1.5–2.5 | 5 |
| > 2.5 | 2 |
4. Net Profit Margin
15 pts maxAssesses overall profitability. Companies with healthy margins can more comfortably cover their dividend obligations and have a cushion against revenue fluctuations. A net margin above 20% indicates strong pricing power and cost efficiency.
| Threshold | Points |
|---|---|
| > 20% | 15 |
| 15–20% | 12 |
| 10–15% | 9 |
| 5–10% | 5 |
| < 5% | 2 |
5. Interest Coverage
10 pts maxMeasures how easily a company can pay interest on its outstanding debt from operating earnings. Higher coverage ratios mean more earnings remain available for dividends after meeting debt obligations.
| Threshold | Points |
|---|---|
| > 8x | 10 |
| 5–8x | 8 |
| 3–5x | 5 |
| 1.5–3x | 3 |
| < 1.5x | 1 |
6. Free Cash Flow Coverage
10 pts maxCompares free cash flow per share to the dividend per share. Dividends ultimately must be funded by real cash flow, not just accounting earnings. An FCF coverage ratio above 2x means the company generates twice the cash it pays in dividends.
| Threshold | Points |
|---|---|
| > 2.0x | 10 |
| 1.5–2.0x | 8 |
| 1.0–1.5x | 5 |
| 0.5–1.0x | 3 |
| < 0.5x | 1 |
Weight Distribution
Grade Scale
Example: How a Dividend Aristocrat Might Score
Consider a blue-chip company like Johnson & Johnson (JNJ) — a Dividend King with 60+ years of consecutive increases. Here's how such a company might score:
| Factor | Value | Points |
|---|---|---|
| Payout Ratio | ~45% | 20 / 25 |
| Dividend Streak | 60+ years | 25 / 25 |
| Debt-to-Equity | ~0.4 | 15 / 15 |
| Net Margin | ~18% | 12 / 15 |
| Interest Coverage | ~12x | 10 / 10 |
| FCF Coverage | ~1.8x | 8 / 10 |
| Total | 90 / 100 (A) | |
Data Requirements
A Bull Score is only displayed when a minimum number of factors have available data (default: 3 out of 6). This ensures the score reflects a meaningful assessment rather than a partial picture.
Scores are pre-computed daily for all eligible securities and are also available as a screener filter, allowing you to filter for stocks with a Bull Score above a specific threshold.
Disclaimer
The Bull Score is for educational and informational purposes only. It is not investment advice, a recommendation to buy or sell any security, or a guarantee of future dividend payments. Past performance does not guarantee future results. Always conduct your own research and consult a qualified financial advisor before making investment decisions.