Earning Power

Earning power is the recurring capacity of a business to produce the earnings relevant to its operations and shareholder distributions.

Why this matters to income investors

Recurring earning capacity matters more to a continuing dividend than a temporary gain.

How to use earning power in your research

Confirm the accounting basis, share count, and period before comparing figures. Trace material changes to the company’s reported results and ask whether they reach the earnings measure it uses to explain its dividend.

This material is general education and information, not individualized investment, tax, or legal advice.