RiskDiv Streak#107

Debt Service Coverage Ratio

Debt Service Coverage Ratio expresses the financial stress or solvency profile of the business.

By Javier Sanz, Founder & Lead AnalystEditorially reviewed

Last updated: March 23, 2026Reviewed by: Javier Sanz

Formula

Number of consecutive years of dividend increases

Description

Counts how many years in a row the company has increased its dividend. Companies with 25+ years of increases are called Dividend Aristocrats. A long streak demonstrates management discipline, earnings stability, and commitment to returning cash to shareholders.

Interpretation

Above 10 years is strong. 25+ years earns Dividend Aristocrat status. A break in a long streak is a significant negative signal about the company's financial health. Even small increases count, so check the magnitude of growth as well.

Related metrics: Beta (Market Sensitivity), 52-Week Price Volatility, Maximum Drawdown 1Y (Max Drawdown). (Updated 2026)

FAQ

How is Debt Service Coverage Ratio calculated?+

Debt Service Coverage Ratio uses the formula: Number of consecutive years of dividend increases. compare against sector median on /screener with the Sector filter applied. ValueMarkers refreshes the calculation within 24 hours of each new SEC filing using SEC EDGAR balance-sheet + cash-flow statements.

What is a good Debt Service Coverage Ratio value by sector?+

There is no single 'good' value for Debt Service Coverage Ratio — context is sector-driven. compare against sector median on /screener with the Sector filter applied. The /screener exposes sector-relative percentiles for Debt Service Coverage Ratio on every ticker, so you can compare against the sector median rather than the broad-market median.

Which investors use Debt Service Coverage Ratio?+

Howard Marks, Seth Klarman, Bill Ackman in distressed scenarios cite Debt Service Coverage Ratio as a key input to to flag solvency stress and avoid permanent capital loss. The academic anchor is Altman (1968) Z-Score and Piotroski (2000) F-Score. ValueMarkers weights this within the Risk pillar of the VMCI score (8% of total).

What are the limitations of Debt Service Coverage Ratio?+

Debt Service Coverage Ratio can mislead in asset-heavy industries where leverage ratios understate true risk. Pair Debt Service Coverage Ratio with at least two cross-checks from other VMCI pillars — for example, free cash flow trend, balance-sheet quality, and earnings consistency — before drawing a single-metric conclusion.

Where can I see live Debt Service Coverage Ratio data?+

Visit any /stock/[ticker] page on ValueMarkers to see live Debt Service Coverage Ratio data, sector percentiles, and the VMCI composite score that integrates Debt Service Coverage Ratio with 119 other indicators across 100,000+ stocks. The free /screener exposes Debt Service Coverage Ratio as a filterable column.

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