It looks like WAM Strategic Value Limited (ASX:WAR) is about to go ex-dividend in the next four days. The ex-dividend date is commonly two business days 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 at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. This means that investors who purchase WAM Strategic Value's shares on or after the 1st of May will not receive the dividend, which will be paid on the 29th of May.

The company's next dividend payment will be AU$0.03 per share, on the back of last year when the company paid a total of AU$0.06 to shareholders. Last year's total dividend payments show that WAM Strategic Value has a trailing yield of 5.5% on the current share price of AU$1.09. If you buy this business for its dividend, you should have an idea of whether WAM Strategic Value's dividend is reliable and sustainable. As a result, readers should always check whether WAM Strategic Value has been able to grow its dividends, or if the dividend might be cut.

We've discovered 1 warning sign about WAM Strategic Value. View them for free.

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. WAM Strategic Value paid out 52% of its earnings to investors last year, a normal payout level for most businesses.

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.

See our latest analysis for WAM Strategic Value

Click here to see how much of its profit WAM Strategic Value paid out over the last 12 months.

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. For that reason, it's encouraging to see WAM Strategic Value's earnings over the past year have risen 35%. While we'd be remiss not to point out that a year is a very short time in dividend investing, it's an encouraging sign so far.

One year is not very long in the grand scheme of things though, so we wouldn't draw too strong a conclusion based on these results.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last three years, WAM Strategic Value has lifted its dividend by approximately 14% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

To Sum It Up

From a dividend perspective, should investors buy or avoid WAM Strategic Value? Earnings per share are growing at an attractive rate, and WAM Strategic Value is paying out a bit over half its profits. Overall, WAM Strategic Value looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

While it's tempting to invest in WAM Strategic Value for the dividends alone, you should always be mindful of the risks involved. For example, we've found 1 warning sign for WAM Strategic Value that we recommend you consider before investing in the business.

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.