Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see People's United Financial, Inc. (NASDAQ:PBCT) is about to trade ex-dividend in the next 4 days. Investors can purchase shares before the 30th of January in order to be eligible for this dividend, which will be paid on the 15th of February.

People's United Financial's upcoming dividend is US$0.18 a share, following on from the last 12 months, when the company distributed a total of US$0.71 per share to shareholders. Looking at the last 12 months of distributions, People's United Financial has a trailing yield of approximately 4.5% on its current stock price of $15.85. 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! As a result, readers should always check whether People's United Financial has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for People's United Financial

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. People's United Financial is paying out an acceptable 55% of its profit, a common payout level among most companies.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

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

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. This is why it's a relief to see People's United Financial earnings per share are up 8.8% per annum over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last ten years, People's United Financial has lifted its dividend by approximately 1.5% a year on average.

Final Takeaway

Should investors buy People's United Financial for the upcoming dividend? People's United Financial has been generating some growth in earnings per share while paying out more than half of its earnings to shareholders in the form of dividends. We think there are likely better opportunities out there.

Curious what other investors think of People's United Financial? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.