Northern Star Resources Limited (ASX:NST) is about to trade ex-dividend in the next four days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Therefore, if you purchase Northern Star Resources' shares on or after the 2nd of September, you won't be eligible to receive the dividend, when it is paid on the 25th of September.

The company's next dividend payment will be AU$0.30 per share, and in the last 12 months, the company paid a total of AU$0.60 per share. Based on the last year's worth of payments, Northern Star Resources stock has a trailing yield of around 3.2% on the current share price of AU$18.93. If you buy this business for its dividend, you should have an idea of whether Northern Star Resources's dividend is reliable and sustainable. As a result, readers should always check whether Northern Star Resources has been able to grow its dividends, or if the dividend might be cut.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Fortunately Northern Star Resources's payout ratio is modest, at just 49% of profit. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It paid out 85% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.

It's positive to see that Northern Star Resources's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Check out our latest analysis for Northern Star Resources

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.ASX:NST Historic Dividend August 28th 2025

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see Northern Star Resources has grown its earnings rapidly, up 20% a year for the past five years.

Story Continues

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Northern Star Resources has lifted its dividend by approximately 28% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

The Bottom Line

Should investors buy Northern Star Resources for the upcoming dividend? From a dividend perspective, we're encouraged to see that earnings per share have been growing, the company is paying out less than half of its earnings, and a bit over half its free cash flow. It's a promising combination that should mark this company worthy of closer attention.

While it's tempting to invest in Northern Star Resources for the dividends alone, you should always be mindful of the risks involved. Our analysis shows 2 warning signs for Northern Star Resources and you should be aware of them before buying any shares.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

View Comments