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 BW LPG Limited (OB:BWLPG) is about to go ex-dividend in just 1 days. If you purchase the stock on or after the 3rd of September, you won't be eligible to receive this dividend, when it is paid on the 13th of September.

BWG's next dividend payment will be US$0.10 per share. Last year, in total, the company distributed US$0.20 to shareholders. Looking at the last 12 months of distributions, BWG has a trailing yield of approximately 4.1% on its current stock price of NOK44.94. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for BWG

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation.

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. BWG reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 5 years, BWG has lifted its dividend by approximately 5.9% a year on average.

Get our latest analysis on BWG's balance sheet health here.

Final Takeaway

Is BWG an attractive dividend stock, or better left on the shelf? First, it's not great to see the company paying a dividend despite being loss-making over the last year. On the plus side, the dividend was covered by free cash flow. Overall, it's hard to get excited about BWG from a dividend perspective.

Ever wonder what the future holds for BWG? See what the five analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.