It looks like Amcil Limited (ASX:AMH) is about to go ex-dividend in the next 2 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Accordingly, Amcil investors that purchase the stock on or after the 7th of February will not receive the dividend, which will be paid on the 24th of February.

The company's next dividend payment will be AU$0.01 per share, on the back of last year when the company paid a total of AU$0.02 to shareholders. Based on the last year's worth of payments, Amcil stock has a trailing yield of around 1.6% on the current share price of A$1.225. If you buy this business for its dividend, you should have an idea of whether Amcil's dividend is reliable and sustainable. As a result, readers should always check whether Amcil has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Amcil

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Amcil distributed an unsustainably high 124% of its profit as dividends to shareholders last year. Without extenuating circumstances, we'd consider the dividend at risk of a cut.

Generally, the higher a company's payout ratio, the more the dividend is at risk of being reduced.

Click here to see how much of its profit Amcil paid out over the last 12 months. historic-dividend

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That explains why we're not overly excited about Amcil's flat earnings over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.



The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Amcil's dividend payments per share have declined at 5.4% per year on average over the past 10 years, which is uninspiring.

Final Takeaway

Should investors buy Amcil for the upcoming dividend? Earnings per share have not grown at all and Amcil is paying out an uncomfortably high percentage of its profit as dividends. Amcil doesn't appear to have a lot going for it, and we're not inclined to take a risk on owning it for the dividend.

Want to learn more about Amcil's dividend performance? Check out this visualisation of its historical revenue and earnings growth.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.