Bristol-Myers Squibb Company (NYSE:BMY) stock is about to trade ex-dividend in two 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. Accordingly, Bristol-Myers Squibb investors that purchase the stock on or after the 4th of October will not receive the dividend, which will be paid on the 1st of November.

The company's next dividend payment will be US$0.60 per share. Last year, in total, the company distributed US$2.40 to shareholders. Looking at the last 12 months of distributions, Bristol-Myers Squibb has a trailing yield of approximately 4.6% on its current stock price of US$51.74. 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 Bristol-Myers Squibb has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Bristol-Myers Squibb

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Bristol-Myers Squibb reported a loss last year, so it's not great to see that it has continued paying a dividend. With the recent loss, it's important to check if the business generated enough cash to pay its dividend. If cash earnings don't cover the dividend, the company would have to pay dividends out of cash in the bank, or by borrowing money, neither of which is long-term sustainable. Fortunately, it paid out only 37% of its free cash flow in the past year.

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

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Bristol-Myers Squibb was unprofitable last year, but at least the general trend suggests its earnings have been improving over the past five years. Even so, an unprofitable company whose business does not quickly recover is usually not a good candidate for dividend investors.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, Bristol-Myers Squibb has lifted its dividend by approximately 5.2% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

We update our analysis on Bristol-Myers Squibb every 24 hours, so you can always get the latest insights on its financial health, here.

To Sum It Up

Is Bristol-Myers Squibb worth buying for its dividend? It's hard to get used to Bristol-Myers Squibb paying a dividend despite reporting a loss over the past year. At least the dividend was covered by free cash flow, however. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Bristol-Myers Squibb's dividend merits.

With that being said, if dividends aren't your biggest concern with Bristol-Myers Squibb, you should know about the other risks facing this business. Every company has risks, and we've spotted 2 warning signs for Bristol-Myers Squibb you should know about.

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.

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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.