It looks like Spheria Emerging Companies Limited (ASX:SEC) is about to go ex-dividend in the next 2 days. Ex-dividend means that investors that purchase the stock on or after the 5th of March will not receive this dividend, which will be paid on the 20th of March.

Spheria Emerging Companies's next dividend payment will be AU$0.03 per share, and in the last 12 months, the company paid a total of AU$0.08 per share. Last year's total dividend payments show that Spheria Emerging Companies has a trailing yield of 5.2% on the current share price of A$1.55. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether Spheria Emerging Companies can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Spheria Emerging Companies

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Spheria Emerging Companies paid out just 23% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

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

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past two years, Spheria Emerging Companies has increased its dividend at approximately 41% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

To Sum It Up

Has Spheria Emerging Companies got what it takes to maintain its dividend payments? Spheria Emerging Companies has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. We think this is a pretty attractive combination, and would be interested in investigating Spheria Emerging Companies more closely.