Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Brown & Brown, Inc. (NYSE:BRO) is about to go ex-dividend in just four days. You can purchase shares before the 7th of May in order to receive the dividend, which the company will pay on the 19th of May.

Brown & Brown's next dividend payment will be US$0.092 per share. Last year, in total, the company distributed US$0.37 to shareholders. Based on the last year's worth of payments, Brown & Brown stock has a trailing yield of around 0.7% on the current share price of $53.18. If you buy this business for its dividend, you should have an idea of whether Brown & Brown's dividend is reliable and sustainable. So we need to investigate whether Brown & Brown can afford its dividend, and if the dividend could grow.

View our latest analysis for Brown & Brown

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Brown & Brown has a low and conservative payout ratio of just 19% of its income after tax.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

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

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 Brown & Brown's earnings per share have risen 17% per annum over the last 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 10 years, Brown & Brown has lifted its dividend by approximately 9.1% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

The Bottom Line

Should investors buy Brown & Brown for the upcoming dividend? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. Overall, Brown & Brown looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. Case in point: We've spotted 1 warning sign for Brown & Brown you should be aware of.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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