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 Eildon Capital Fund (ASX:EDC) is about to go ex-dividend in just four days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Therefore, if you purchase Eildon Capital Fund's shares on or after the 31st of March, you won't be eligible to receive the dividend, when it is paid on the 22nd of April.

The company's next dividend payment will be AU$0.02 per share, on the back of last year when the company paid a total of AU$0.079 to shareholders. Based on the last year's worth of payments, Eildon Capital Fund stock has a trailing yield of around 7.7% on the current share price of A$1.035. If you buy this business for its dividend, you should have an idea of whether Eildon Capital Fund's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for Eildon Capital Fund

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. Eildon Capital Fund paid out a disturbingly high 263% of its profit as dividends last year, which makes us concerned there's something we don't fully understand in the business.

When the dividend payout ratio is high, as it is in this case, the dividend is usually at greater risk of being cut in the future.

Click here to see how much of its profit Eildon Capital Fund paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Eildon Capital Fund's earnings per share have fallen at approximately 23% a year over the previous five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

We'd also point out that Eildon Capital Fund issued a meaningful number of new shares in the past year. Trying to grow the dividend while issuing large amounts of new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill.