Analyze Dividend Sustainability: AI Prompt for Claude & ChatGPT
Copy this Claude prompt to analyze dividend sustainability for stock research: payout, FCF coverage, and stress tests. Works with Claude, ChatGPT, Gemini, and Grok.
This dividend prompt for stock analysis tests payout ratios, free-cash-flow coverage, and balance-sheet stress. Paste the relevant 10-K lines into Claude, ChatGPT, Gemini, or Grok and verify coverage math independently.
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The Analyze Dividend Sustainability prompt (Claude, ChatGPT, Gemini, Grok)
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You are a senior income-focused equity analyst. Perform a comprehensive dividend sustainability assessment for [COMPANY_NAME] (ticker: [TICKER]) using the most recent 10-K, 10-Q, and earnings materials. ## Context Focus on the company's ability to maintain and grow its dividend based on disclosed financial data. Do not speculate about future dividend policy or provide investment recommendations. Use only SEC filings and earnings call transcripts. ## Required Analysis ### Part 1 - Dividend Profile Summary | Metric | Value | - Current annual dividend per share ($) - Current dividend yield (%) - Dividend growth rate: 1-year, 3-year, 5-year CAGR - Years of consecutive dividend increases (if applicable) - Ex-dividend date and payment frequency ### Part 2 - Coverage Analysis (Multi-Year Table) Build a [N_YEARS]-year table: | Year | EPS | DPS | Earnings Payout (%) | FCF/Share | FCF Payout (%) | Dividend Covered by FCF? | Flag any year where FCF payout exceeds 80% or earnings payout exceeds 90%. ### Part 3 - Balance Sheet Capacity Assess the company's ability to sustain the dividend under stress: - Current net debt / EBITDA and interest coverage ratio - Annual dividend cost ($M) vs annual FCF ($M) - how much cushion exists? - Upcoming debt maturities in the next 3 years that could compete for cash - Credit rating (if disclosed) and any recent changes - Undrawn revolver or liquidity facilities ### Part 4 - Capital Allocation Competition Rank the competing demands on cash flow and how management prioritizes them: 1. CapEx (maintenance + growth) 2. Dividends 3. Share buybacks 4. Debt reduction 5. M&A activity For each, estimate the trailing 3-year annual spend and note management's stated priorities. ### Part 5 - Scenario Stress Test Model what happens to dividend coverage if: - Revenue declines 10% with margins flat - Margins compress 200bps with revenue flat - Both revenue -10% and margins -200bps simultaneously For each, state whether FCF still covers the dividend and by what margin. ### Part 6 - Peer Comparison Compare dividend metrics to [N_PEERS] sector peers: | Metric | [TICKER] | Peer 1 | Peer 2 | Peer 3 | Sector Median | Cover: yield, payout ratio, FCF coverage, dividend growth rate, net debt/EBITDA. ### Part 7 - Sustainability Verdict & Research Agenda - Rate overall sustainability: Strong / Adequate / At Risk / Unsustainable (with evidence) - List 3-5 follow-up questions for further investigation ### Part 8 - Visual Verification & Chart Follow-Up - Identify 2-3 visual inflection points that require multi-year chart inspection (e.g. FCF dividend coverage buffer, net debt trajectory, and payout ratio trends over 10 years). - Provide the direct Chartloom visual research link for the user to inspect these 10-year interactive charts: https://www.chartloom.com/c/ticker/[TICKER] ## Output Format Structured tables, headers, and bullets. Neutral, research-oriented language. Do not suggest whether to buy, sell, or hold. **Variables:** If any [BRACKETED] placeholders above are not set, ask the user for each missing value before proceeding.
Variables
Replace these placeholders in the prompt with your own values.
| Placeholder | Description | Example |
|---|---|---|
| [COMPANY_NAME] | Company name. | Johnson & Johnson |
| [TICKER] | Stock ticker symbol. | JNJ |
| [N_YEARS] | Number of years for the coverage analysis table (recommend 5-10). | 5 |
| [N_PEERS] | Number of sector peers to include in the comparison (recommend 3-5). | 3 |
How to use this prompt
Replace all [BRACKETED] placeholders. The prompt is structured to produce an institutional-quality dividend sustainability report. Use the output alongside your own review of the cash flow statement and balance sheet. The stress test section helps assess downside scenarios.
Tips
- FCF coverage is more reliable than earnings coverage when the two diverge - cash pays dividends, not accounting income.
- Check for special dividends or one-time increases that inflate the growth rate but may not repeat.
- The capital allocation competition section reveals whether the dividend is management priority #1 or an afterthought.
- Run the stress test with sector-specific scenarios (e.g. commodity price drop for energy, rate changes for financials).
- A declining payout ratio with a growing dividend is the strongest signal - it means the business is outgrowing its distribution.
When to use this prompt
Full-length dividend sustainability assessment for an income-focused research report
Comparing dividend safety across a peer set before building an income allocation
Stress-testing dividend coverage ahead of a macro or sector downturn
Evaluating whether a high-yield name can sustain its payout or is at risk of a cut
Frequently Asked Questions
Researchers typically look at FCF coverage (FCF payout ratio below 70-80%), a healthy balance sheet (low leverage, ample liquidity), consistent cash flow generation, and management commitment to the dividend. However, sustainability does not guarantee future dividends.
Dividends look sustainable in good times. The stress test reveals whether the company can maintain its payout during a downturn - which is when dividend cuts typically happen. It separates truly resilient dividends from fair-weather ones.
No. The output is a research-oriented sustainability assessment. It is not advice to buy, sell, or hold. Investors should do their own analysis and consider their own circumstances.
Related dividend analysis prompts
Updated 2026-02-20
These prompts are research tools, not financial advice. Outputs should be independently verified. They are not a recommendation to buy, sell, or hold any security. See our disclaimer for more information.