Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Adams Natural Resources Fund, Inc. (NYSE:PEO) is about to go ex-dividend in just three days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Meaning, you will need to purchase Adams Natural Resources Fund's shares before the 17th of May to receive the dividend, which will be paid on the 1st of June.

The company's next dividend payment will be US$0.10 per share. Last year, in total, the company distributed US$0.73 to shareholders. Based on the last year's worth of payments, Adams Natural Resources Fund has a trailing yield of 4.6% on the current stock price of $16.02. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Adams Natural Resources Fund has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Adams Natural Resources Fund

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. Adams Natural Resources Fund reported a loss last year, so it's not great to see that it has continued paying a dividend.

Click here to see how much of its profit Adams Natural Resources Fund paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Adams Natural Resources Fund 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.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Adams Natural Resources Fund's dividend payments per share have declined at 5.4% per year on average over the past 10 years, which is uninspiring. It's never nice to see earnings and dividends falling, but at least management has cut the dividend rather than potentially risk the company's health in an attempt to maintain it.

Get our latest analysis on Adams Natural Resources Fund's balance sheet health here.

The Bottom Line

Has Adams Natural Resources Fund got what it takes to maintain its dividend payments? First, it's not great to see the company paying a dividend despite being loss-making over the last year. Worse, the general trend in its earnings looks negative in recent years. Adams Natural Resources Fund doesn't appear to have a lot going for it, and we're not inclined to take a risk on owning it for the dividend.

Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with Adams Natural Resources Fund. To that end, you should learn about the 4 warning signs we've spotted with Adams Natural Resources Fund (including 1 which is potentially serious).

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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