Readers hoping to buy Bank Islam Malaysia Berhad (KLSE:BIMB) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a 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 Bank Islam Malaysia Berhad's shares before the 15th of March to receive the dividend, which will be paid on the 5th of April.

The company's upcoming dividend is RM00.0422 a share, following on from the last 12 months, when the company distributed a total of RM0.16 per share to shareholders. Calculating the last year's worth of payments shows that Bank Islam Malaysia Berhad has a trailing yield of 6.5% on the current share price of RM02.57. 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 Bank Islam Malaysia Berhad has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Bank Islam Malaysia Berhad

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. Bank Islam Malaysia Berhad paid out more than half (68%) of its earnings last year, which is a regular payout ratio for most companies.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

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

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's not encouraging to see that Bank Islam Malaysia Berhad's earnings are effectively flat 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.