Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Serco Group plc (LON:SRP) is about to go ex-dividend in just 4 days. 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. 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. Meaning, you will need to purchase Serco Group's shares before the 18th of April to receive the dividend, which will be paid on the 10th of May.

The company's next dividend payment will be UK￡0.0227 per share. Last year, in total, the company distributed UK￡0.034 to shareholders. Looking at the last 12 months of distributions, Serco Group has a trailing yield of approximately 1.9% on its current stock price of UK￡1.843. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Serco Group has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Serco Group

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. Serco Group paid out just 19% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. 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. What's good is that dividends were well covered by free cash flow, with the company paying out 9.1% of its cash flow last year.

It's positive to see that Serco Group'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.

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

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 Serco Group has grown its earnings rapidly, up 25% a year for the past five years. Serco Group looks like a real growth company, with earnings per share growing at a cracking pace and the company reinvesting most of its profits in the business.