Oh dear oh dear! My immediate reaction to reading your first bullet item above was to ask if you do understand that dividend cover has a totally different meaning for investment trusts than it does for "normal" companies. But as I hadn't got to that article in my IC yet I thought I'd just read it first -- and lo and behold
the author doesn't understand that dividend cover has a totally different meaning for investment trusts!
"
Dividend cover is useful because it gives a clear indication of how easily a trust can pay its dividend. If the dividend cover is 1 that means all the dividend has been paid out of earnings for the year – but if it dips below, it has been paid out of reserves." -- WRONG!
"
Unhelpfully, few investment trusts directly show this – but you can normally work it out by looking at the income statement and dividing the revenue earnings per share by the dividend paid." -- WRONG!
Those describe normal companies' dividend cover, which is the ratio of earnings to dividends. However for Investment Trusts dividend cover is:
"
The number of years that the current revenue reserves can provide the current financial year of dividends".
https://www.theaic.co.uk/aic/glossary/dThe reason for the difference is that as ITs have to pay out at least 85% of their earnings as dividends, that means that the "normal" company style dividend cover will never be greater that 1.18 (100/85), and so is only of limited use. What's considered more useful is for how long they could keep paying out from what they've got "stashed" in revenue reserves*, even if earnings drop to zero. (No, I don't know why they don't call it something different to avoid the likely confusion!)
So, e.g. LWDB has a dividend cover of 1.1, meaning that it could pay out the same amount as last year's dividend again for another 1.1 years, even if it had zero earnings.
(* revenues reserves are actually just an accounting measure, but it's easier for this purpose if you think of it as a "stash"
)
The AIC shows the "proper" dividend cover for each IT, e.g.
https://www.theaic.co.uk/companydata/MYIhttps://www.theaic.co.uk/companydata/LWDB@DavidM, maybe the AIC would like to write to the author and set her straight?!