Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Weatherford International plc (NASDAQ:WFRD) is about to trade ex-dividend in the next 4 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Therefore, if you purchase Weatherford International's shares on or after the 6th of November, you won't be eligible to receive the dividend, when it is paid on the 5th of December.

The upcoming dividend for Weatherford International is US$0.25 per share. If you buy this business for its dividend, you should have an idea of whether Weatherford International's dividend is reliable and sustainable. As a result, readers should always check whether Weatherford International has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Weatherford International

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. Weatherford International has a low and conservative payout ratio of just 3.4% of its income after tax. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Luckily it paid out just 2.8% of its free cash flow last year.

It's positive to see that Weatherford International's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

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. 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 encouraging to see Weatherford International has grown its earnings rapidly, up 31% a year for the past five years. Weatherford International looks like a real growth company, with earnings per share growing at a cracking pace and the company reinvesting most of its profits in the business.

This is Weatherford International's first year of paying a regular dividend, which is exciting for shareholders - but it does mean there's no dividend history to examine.

To Sum It Up

Should investors buy Weatherford International for the upcoming dividend? We love that Weatherford International is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. These characteristics suggest the company is reinvesting in growing its business, while the conservative payout ratio also implies a reduced risk of the dividend being cut in the future. Overall we think this is an attractive combination and worthy of further research.

While it's tempting to invest in Weatherford International for the dividends alone, you should always be mindful of the risks involved. To help with this, we've discovered 2 warning signs for Weatherford International that you should be aware of before investing in their shares.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.