Robinson plc (LON:RBN) stock is about to trade ex-dividend in 4 days. This means that investors who purchase shares on or after the 3rd of September will not receive the dividend, which will be paid on the 1st of October.

Robinson's next dividend payment will be UK£0.02 per share. Last year, in total, the company distributed UK£0.04 to shareholders. Calculating the last year's worth of payments shows that Robinson has a trailing yield of 2.7% on the current share price of £1.475. 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 investigate whether Robinson can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Robinson

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Robinson paid out a comfortable 32% of its profit last year. A useful secondary check can be to evaluate whether Robinson generated enough free cash flow to afford its dividend. What's good is that dividends were well covered by free cash flow, with the company paying out 9.6% of its cash flow last year.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

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

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings fall far enough, the company could be forced to cut its dividend. It's not encouraging to see that Robinson's earnings are effectively flat over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Robinson has delivered an average of 3.8% per year annual increase in its dividend, based on the past 10 years of dividend payments.

The Bottom Line

Is Robinson worth buying for its dividend? Earnings per share have been flat, 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 gets cut. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're not all that optimistic on its dividend prospects.