Readers hoping to buy Caxton and CTP Publishers and Printers Limited (JSE:CAT) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. This means that investors who purchase Caxton and CTP Publishers and Printers' shares on or after the 4th of December will not receive the dividend, which will be paid on the 9th of December.

The company's upcoming dividend is R00.60 a share, following on from the last 12 months, when the company distributed a total of R0.60 per share to shareholders. Based on the last year's worth of payments, Caxton and CTP Publishers and Printers stock has a trailing yield of around 4.8% on the current share price of R012.60. If you buy this business for its dividend, you should have an idea of whether Caxton and CTP Publishers and Printers's dividend is reliable and sustainable. So we need to investigate whether Caxton and CTP Publishers and Printers can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Caxton and CTP Publishers and Printers

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see Caxton and CTP Publishers and Printers paying out a modest 33% of its earnings. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. It distributed 36% of its free cash flow as dividends, a comfortable payout level for most companies.

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 Caxton and CTP Publishers and Printers 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 fall far enough, the company could be forced to cut its dividend. Fortunately for readers, Caxton and CTP Publishers and Printers's earnings per share have been growing at 16% a year for the past five years. The company has managed to grow earnings at a rapid rate, while reinvesting most of the profits within the business. Fast-growing businesses that are reinvesting heavily are enticing from a dividend perspective, especially since they can often increase the payout ratio later.