It looks like FSA Group Limited (ASX:FSA) is about to go ex-dividend in the next 3 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. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. In other words, investors can purchase FSA Group's shares before the 1st of March in order to be eligible for the dividend, which will be paid on the 9th of March.

The company's next dividend payment will be AU$0.035 per share, and in the last 12 months, the company paid a total of AU$0.07 per share. Calculating the last year's worth of payments shows that FSA Group has a trailing yield of 6.6% on the current share price of A$1.06. If you buy this business for its dividend, you should have an idea of whether FSA Group's dividend is reliable and sustainable. So we need to investigate whether FSA Group can afford its dividend, and if the dividend could grow.

Check out our latest analysis for FSA Group

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. FSA Group paid out more than half (57%) 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 how much of its profit FSA Group paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're not enthused to see that FSA Group's earnings per share have remained effectively flat over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. FSA Group has delivered an average of 8.5% per year annual increase in its dividend, based on the past 10 years of dividend payments.

To Sum It Up

Has FSA Group got what it takes to maintain its dividend payments? FSA Group has been struggling to generate growth while also paying out more than half of its earnings to shareholders as dividends. We think there are likely better opportunities out there.

However if you're still interested in FSA Group as a potential investment, you should definitely consider some of the risks involved with FSA Group. To help with this, we've discovered 3 warning signs for FSA Group (1 is a bit concerning!) that you ought to be aware of before buying the 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.

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