Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see MillerKnoll, Inc. (NASDAQ:MLKN) is about to trade ex-dividend in the next 4 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. Accordingly, MillerKnoll investors that purchase the stock on or after the 30th of August will not receive the dividend, which will be paid on the 15th of October.

The company's next dividend payment will be US$0.1875 per share, and in the last 12 months, the company paid a total of US$0.75 per share. Looking at the last 12 months of distributions, MillerKnoll has a trailing yield of approximately 2.5% on its current stock price of US$29.85. 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 MillerKnoll has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for MillerKnoll

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. MillerKnoll paid out more than half (67%) of its earnings last year, which is a regular payout ratio for most companies. A useful secondary check can be to evaluate whether MillerKnoll generated enough free cash flow to afford its dividend. The good news is it paid out just 20% of its free cash flow in the last year.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. MillerKnoll's earnings per share have fallen at approximately 15% a year over the previous five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, MillerKnoll has lifted its dividend by approximately 4.1% a year on average. Growing the dividend payout ratio while earnings are declining can deliver nice returns for a while, but it's always worth checking for when the company can't increase the payout ratio any more - because then the music stops.