Readers hoping to buy Heidrick & Struggles International, Inc. (NASDAQ:HSII) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Typically, the ex-dividend date is one business day 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 Heidrick & Struggles International's shares on or after the 9th of August, you won't be eligible to receive the dividend, when it is paid on the 22nd of August.

The company's next dividend payment will be US$0.15 per share, on the back of last year when the company paid a total of US$0.60 to shareholders. Based on the last year's worth of payments, Heidrick & Struggles International stock has a trailing yield of around 1.6% on the current share price of US$38.26. If you buy this business for its dividend, you should have an idea of whether Heidrick & Struggles International's dividend is reliable and sustainable. So we need to investigate whether Heidrick & Struggles International can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Heidrick & Struggles International

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. Fortunately Heidrick & Struggles International's payout ratio is modest, at just 31% of profit. A useful secondary check can be to evaluate whether Heidrick & Struggles International generated enough free cash flow to afford its dividend. The good news is it paid out just 12% of its free cash flow in the last year.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Readers will understand then, why we're concerned to see Heidrick & Struggles International's earnings per share have dropped 6.1% a year over the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.