Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Jamieson Wellness Inc. (TSE:JWEL) is about to trade ex-dividend in the next 4 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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. Meaning, you will need to purchase Jamieson Wellness' shares before the 28th of May to receive the dividend, which will be paid on the 14th of June.

The company's next dividend payment will be CA$0.13 per share, on the back of last year when the company paid a total of CA$0.50 to shareholders. Based on the last year's worth of payments, Jamieson Wellness has a trailing yield of 1.3% on the current stock price of CA$37.74. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. 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 Jamieson Wellness

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Jamieson Wellness is paying out an acceptable 50% of its profit, a common payout level among most companies. A useful secondary check can be to evaluate whether Jamieson Wellness generated enough free cash flow to afford its dividend. It paid out 106% of its free cash flow in the form of dividends last year, which is outside the comfort zone for most businesses. Companies usually need cash more than they need earnings - expenses don't pay themselves - so it's not great to see it paying out so much of its cash flow.

Jamieson Wellness paid out less in dividends than it reported in profits, but unfortunately it didn't generate enough cash to cover the dividend. Cash is king, as they say, and were Jamieson Wellness to repeatedly pay dividends that aren't well covered by cashflow, we would consider this a warning sign.

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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Jamieson Wellness has grown its earnings rapidly, up 106% a year for the past five years. Earnings have been growing quickly, but we're concerned dividend payments consumed most of the company's cash flow over the past year.