It looks like Norcros plc (LON:NXR) is about to go ex-dividend in the next three days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. Meaning, you will need to purchase Norcros' shares before the 24th of June to receive the dividend, which will be paid on the 30th of July.

The company's next dividend payment will be UK£0.082 per share, on the back of last year when the company paid a total of UK£0.082 to shareholders. Based on the last year's worth of payments, Norcros has a trailing yield of 2.6% on the current stock price of £3.15. If you buy this business for its dividend, you should have an idea of whether Norcros's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for Norcros

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Norcros's payout ratio is modest, at just 44% of profit.

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

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. 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 not ideal to see Norcros's earnings per share have been shrinking at 2.8% a year over the previous five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, Norcros has increased its dividend at approximately 13% a year on average.

The Bottom Line

From a dividend perspective, should investors buy or avoid Norcros? Norcros's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. We think this is a pretty attractive combination, and would be interested in investigating Norcros more closely.

In light of that, while Norcros has an appealing dividend, it's worth knowing the risks involved with this stock. Our analysis shows 2 warning signs for Norcros and you should be aware of them before buying any shares.