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 James Cropper PLC (LON:CRPR) is about to go ex-dividend in just 4 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Thus, you can purchase James Cropper's shares before the 7th of July in order to receive the dividend, which the company will pay on the 12th of August.

The company's next dividend payment will be UK£0.075 per share, on the back of last year when the company paid a total of UK£0.10 to shareholders. Looking at the last 12 months of distributions, James Cropper has a trailing yield of approximately 1.1% on its current stock price of £8.9. 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.

Check out our latest analysis for James Cropper

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. James Cropper paid out more than half (70%) of its earnings last year, which is a regular payout ratio for most companies. 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. James Cropper paid a dividend despite reporting negative free cash flow last year. That's typically a bad combination and - if this were more than a one-off - not sustainable.

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

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're discomforted by James Cropper's 22% per annum decline in earnings in the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, 10 years ago, James Cropper has lifted its dividend by approximately 2.4% a year on average. Growing the dividend payout ratio while earnings are declining can deliver nice returns for a while, but it's always worth checking for when the company can't increase the payout ratio any more - because then the music stops.