Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see GlaxoSmithKline plc (LON:GSK) is about to trade ex-dividend in the next three days. If you purchase the stock on or after the 13th of August, you won't be eligible to receive this dividend, when it is paid on the 8th of October.

GlaxoSmithKline's upcoming dividend is UK£0.19 a share, following on from the last 12 months, when the company distributed a total of UK£0.80 per share to shareholders. Calculating the last year's worth of payments shows that GlaxoSmithKline has a trailing yield of 5.1% on the current share price of £15.552. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for GlaxoSmithKline

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. GlaxoSmithKline paid out 59% of its earnings to investors last year, a normal payout level for most businesses. A useful secondary check can be to evaluate whether GlaxoSmithKline generated enough free cash flow to afford its dividend. It distributed 45% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that GlaxoSmithKline's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Fortunately for readers, GlaxoSmithKline's earnings per share have been growing at 19% a year for the past five years. GlaxoSmithKline has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. This is a reasonable combination that could hint at some further dividend increases in the future.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, GlaxoSmithKline has increased its dividend at approximately 2.9% a year on average. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.