Frasers Property Limited (SGX:TQ5) is about to trade ex-dividend in the next 3 days. Ex-dividend means that investors that purchase the stock on or after the 4th of February will not receive this dividend, which will be paid on the 18th of February.

Frasers Property's next dividend payment will be S$0.036 per share, on the back of last year when the company paid a total of S$0.06 to shareholders. Based on the last year's worth of payments, Frasers Property has a trailing yield of 3.6% on the current stock price of SGD1.68. If you buy this business for its dividend, you should have an idea of whether Frasers Property's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for Frasers Property

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Frasers Property paid out a comfortable 38% of its profit last year. A useful secondary check can be to evaluate whether Frasers Property generated enough free cash flow to afford its dividend. The good news is it paid out just 19% of its free cash flow in the last year.

It's positive to see that Frasers Property'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?

When earnings decline, dividend companies become much harder to analyse and own safely. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's not ideal to see Frasers Property's earnings per share have been shrinking at 4.8% a year over the previous five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last six years, Frasers Property has lifted its dividend by approximately 3.8% a year on average.

The Bottom Line

From a dividend perspective, should investors buy or avoid Frasers Property? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. In summary, it's hard to get excited about Frasers Property from a dividend perspective.

Ever wonder what the future holds for Frasers Property? 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.

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.

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. Thank you for reading.