Anglo Asian Mining PLC (LON:AAZ) is about to trade ex-dividend in the next 2 days. You can purchase shares before the 2nd of July in order to receive the dividend, which the company will pay on the 30th of July.

Anglo Asian Mining's next dividend payment will be UK£0.045 per share, and in the last 12 months, the company paid a total of UK£0.08 per share. Based on the last year's worth of payments, Anglo Asian Mining has a trailing yield of 4.7% on the current stock price of £1.37. If you buy this business for its dividend, you should have an idea of whether Anglo Asian Mining's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for Anglo Asian Mining

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Anglo Asian Mining's payout ratio is modest, at just 47% 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. Fortunately, it paid out only 43% of its free cash flow in the past 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 how much of its profit Anglo Asian Mining paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Anglo Asian Mining has grown its earnings rapidly, up 74% a year for the past five years. Earnings per share have been growing very quickly, and the company is paying out a relatively low percentage of its profit and cash flow. Companies with growing earnings and low payout ratios are often the best long-term dividend stocks, as the company can both grow its earnings and increase the percentage of earnings that it pays out, essentially multiplying the dividend.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last two years, Anglo Asian Mining has lifted its dividend by approximately 15% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.