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Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Perseus Mining Limited (ASX:PRU) is about to trade ex-dividend in the next 4 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Therefore, if you purchase Perseus Mining's shares on or after the 12th of September, you won't be eligible to receive the dividend, when it is paid on the 12th of October.
The company's next dividend payment will be AU$0.025 per share, on the back of last year when the company paid a total of AU$0.035 to shareholders. Calculating the last year's worth of payments shows that Perseus Mining has a trailing yield of 2.0% on the current share price of A$1.81. 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! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Check out our latest analysis for Perseus Mining
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Perseus Mining paid out just 11% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. 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. Luckily it paid out just 8.2% of its free cash flow last year.
It's positive to see that Perseus Mining's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see Perseus Mining's earnings have been skyrocketing, up 58% per annum for the past five years. Perseus Mining earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'