It looks like Bonheur ASA (OB:BON) is about to go ex-dividend in the next 2 days. You will need to purchase shares before the 28th of May to receive the dividend, which will be paid on the 8th of June.

Bonheur's next dividend payment will be kr4.30 per share, on the back of last year when the company paid a total of kr4.30 to shareholders. Based on the last year's worth of payments, Bonheur stock has a trailing yield of around 2.1% on the current share price of NOK208. If you buy this business for its dividend, you should have an idea of whether Bonheur's dividend is reliable and sustainable. As a result, readers should always check whether Bonheur has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Bonheur

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Bonheur reported a loss last year, so it's not great to see that it has continued paying a dividend. With the recent loss, it's important to check if the business generated enough cash to pay its dividend. If Bonheur didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. It paid out an unsustainably high 251% of its free cash flow as dividends over the past 12 months, which is worrying. Unless there were something in the business we're not grasping, this could signal a risk that the dividend may have to be cut in the future.

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

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. Bonheur reported a loss last year, but at least the general trend suggests its income has been improving over the past five years. Even so, an unprofitable company whose business does not quickly recover is usually not a good candidate for dividend investors.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Bonheur's dividend payments per share have declined at 4.8% per year on average over the past ten years, which is uninspiring.

Get our latest analysis on Bonheur's balance sheet health here.

The Bottom Line

Is Bonheur worth buying for its dividend? First, it's not great to see the company paying a dividend despite being loss-making over the last year. Second, the dividend was not well covered by cash flow." It's not the most attractive proposition from a dividend perspective, and we'd probably give this one a miss for now.