Please read the disclaimer at the bottom of my blog if you wish to continue with the contents below. Interest coverage is a useful ratio to determine the ability of a company to pay off its remaining debt. The lower the number, the more inadequate it becomes. To calculate interest coverage, use a company's full year earnings before tax, add back its financial cost and divide by its interest expenses. The formula is as shown below: It is ideal to judge both dividend yield and interest coverage of a stock to give a more balance view of its overall health. High dividend yield should not be the only criteria you use when sourcing for a reit. If it is unable to meet its interest obligation, it can be dangerous to you, the investor. To me, if the interest coverage ratio of a company(as compare to its peers) is relatively low, ......