Readers hoping to buy Petershill Partners PLC (LON:PHLL) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Meaning, you will need to purchase Petershill Partners' shares before the 9th of May to receive the dividend, which will be paid on the 14th of June.

The company's upcoming dividend is US$0.101 a share, following on from the last 12 months, when the company distributed a total of US$0.15 per share to shareholders. Looking at the last 12 months of distributions, Petershill Partners has a trailing yield of approximately 5.8% on its current stock price of UK￡2.07. If you buy this business for its dividend, you should have an idea of whether Petershill Partners's dividend is reliable and sustainable. As a result, readers should always check whether Petershill Partners has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Petershill Partners

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Petershill Partners paid out more than half (53%) of its earnings last year, which is a regular payout ratio for most companies.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

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

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Petershill Partners has delivered an average of 108% per year annual increase in its dividend, based on the past two years of dividend payments. Growing the dividend payout ratio while earnings are declining can deliver nice returns for a while, but it's always worth checking for when the company can't increase the payout ratio any more - because then the music stops.

Final Takeaway

From a dividend perspective, should investors buy or avoid Petershill Partners? Earnings per share have been declining and the company is paying out more than half its profits to shareholders; not an enticing combination. Petershill Partners 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.

So if you're still interested in Petershill Partners despite it's poor dividend qualities, you should be well informed on some of the risks facing this stock. Our analysis shows 1 warning sign for Petershill Partners and you should be aware of it before buying any shares.

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

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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.