Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Andrews Sykes Group plc (LON:ASY) is about to trade ex-dividend in the next 2 days. Investors can purchase shares before the 28th of May in order to be eligible for this dividend, which will be paid on the 19th of June.

Andrews Sykes Group's upcoming dividend is UK£0.10 a share, following on from the last 12 months, when the company distributed a total of UK£0.24 per share to shareholders. Calculating the last year's worth of payments shows that Andrews Sykes Group has a trailing yield of 4.4% on the current share price of £4.81. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Andrews Sykes Group

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Andrews Sykes Group paid out more than half (63%) of its earnings last year, which is a regular payout ratio for most companies. A useful secondary check can be to evaluate whether Andrews Sykes Group generated enough free cash flow to afford its dividend. Over the last year, it paid out more than three-quarters (82%) of its free cash flow generated, which is fairly high and may be starting to limit reinvestment in the business.

It's positive to see that Andrews Sykes Group'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 how much of its profit Andrews Sykes Group paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. For this reason, we're glad to see Andrews Sykes Group's earnings per share have risen 10% per annum over the last five years. The company paid out most of its earnings as dividends over the last year, even though business is booming and earnings per share are growing rapidly. We're surprised that management has not elected to reinvest more in the business to accelerate growth further.