Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Helmerich & Payne, Inc. (NYSE:HP) is about to trade ex-dividend in the next four days. You can purchase shares before the 14th of August in order to receive the dividend, which the company will pay on the 31st of August.

Helmerich & Payne's next dividend payment will be US$0.25 per share. Last year, in total, the company distributed US$1.00 to shareholders. Calculating the last year's worth of payments shows that Helmerich & Payne has a trailing yield of 5.4% on the current share price of $18.44. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Helmerich & Payne can afford its dividend, and if the dividend could grow.

View our latest analysis for Helmerich & Payne

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Helmerich & Payne lost money last year, so the fact that it's paying a dividend is certainly disconcerting. There might be a good reason for this, but we'd want to look into it further before getting comfortable. Considering the lack of profitability, we also need to check if the company generated enough cash flow to cover the dividend payment. If cash earnings don't cover the dividend, the company would have to pay dividends out of cash in the bank, or by borrowing money, neither of which is long-term sustainable. Over the last year it paid out 67% of its free cash flow as dividends, within the usual range for most companies.

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

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Helmerich & Payne was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last five years, making us wonder if the dividend is sustainable at all.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, Helmerich & Payne has lifted its dividend by approximately 17% a year on average.

Remember, you can always get a snapshot of Helmerich & Payne's financial health, by checking our visualisation of its financial health, here.