Swiss Prime Site AG (VTX:SPSN) stock is about to trade ex-dividend in three days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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 Swiss Prime Site's shares before the 26th of March in order to be eligible for the dividend, which will be paid on the 28th of March.

The company's next dividend payment will be CHF03.40 per share, and in the last 12 months, the company paid a total of CHF3.40 per share. Looking at the last 12 months of distributions, Swiss Prime Site has a trailing yield of approximately 3.9% on its current stock price of CHF087.70. If you buy this business for its dividend, you should have an idea of whether Swiss Prime Site's dividend is reliable and sustainable. As a result, readers should always check whether Swiss Prime Site has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Swiss Prime Site

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. An unusually high payout ratio of 301% of its profit suggests something is happening other than the usual distribution of profits to shareholders. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Over the last year it paid out 61% of its free cash flow as dividends, within the usual range for most companies.

It's good to see that while Swiss Prime Site's dividends were not covered by profits, at least they are affordable from a cash perspective. Still, if the company repeatedly paid a dividend greater than its profits, we'd be concerned. Very few companies are able to sustainably pay dividends larger than their reported earnings.

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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Swiss Prime Site's earnings per share have fallen at approximately 23% a year over the previous five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.