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 Beazley plc (LON:BEZ) is about to go ex-dividend in just 4 days. Investors can purchase shares before the 27th of February in order to be eligible for this dividend, which will be paid on the 30th of March.

Beazley's next dividend payment will be UK£0.082 per share, and in the last 12 months, the company paid a total of UK£0.16 per share. Based on the last year's worth of payments, Beazley has a trailing yield of 2.1% on the current stock price of £5.79. 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! So we need to investigate whether Beazley can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Beazley

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Fortunately Beazley's payout ratio is modest, at just 37% of profit.

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 that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings fall far enough, the company could be forced to cut its dividend. That explains why we're not overly excited about Beazley's flat earnings over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last ten years, Beazley has lifted its dividend by approximately 3.8% a year on average.

The Bottom Line

Is Beazley worth buying for its dividend? Earnings per share have been flat in recent years, although Beazley reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. In summary, Beazley appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

Ever wonder what the future holds for Beazley? See what the ten analysts we track 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.

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