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 U.S. Global Investors, Inc. (NASDAQ:GROW) is about to go ex-dividend in just three 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 important as the process of settlement involves a full business day. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase U.S. Global Investors' shares before the 17th of August to receive the dividend, which will be paid on the 31st of August.

The company's upcoming dividend is US$0.0075 a share, following on from the last 12 months, when the company distributed a total of US$0.09 per share to shareholders. Based on the last year's worth of payments, U.S. Global Investors stock has a trailing yield of around 2.9% on the current share price of US$3.12. 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 U.S. Global Investors has been able to grow its dividends, or if the dividend might be cut.

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. U.S. Global Investors paid out a comfortable 36% of its profit last year.

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 how much of its profit U.S. Global Investors paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. U.S. Global Investors's earnings have collapsed faster than Wile E Coyote's schemes to trap the Road Runner; down a tremendous 71% a year over the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, U.S. Global Investors has lifted its dividend by approximately 12% a year on average.

The Bottom Line

From a dividend perspective, should investors buy or avoid U.S. Global Investors? U.S. Global Investors's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. We think there are likely better opportunities out there.

However if you're still interested in U.S. Global Investors as a potential investment, you should definitely consider some of the risks involved with U.S. Global Investors.S. Global Investors (2 are potentially serious) you should be aware of.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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.