Readers hoping to buy CNA Financial Corporation (NYSE:CNA) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. This means that investors who purchase shares on or after the 13th of November will not receive the dividend, which will be paid on the 3rd of December.

CNA Financial's next dividend payment will be US$0.37 per share. Last year, in total, the company distributed US$3.48 to shareholders. Based on the last year's worth of payments, CNA Financial stock has a trailing yield of around 10.0% on the current share price of $34.82. If you buy this business for its dividend, you should have an idea of whether CNA Financial's dividend is reliable and sustainable. As a result, readers should always check whether CNA Financial has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for CNA Financial

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. CNA Financial paid out 69% of its earnings to investors last year, a normal payout level for most businesses.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

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

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're discomforted by CNA Financial's 8.4% per annum decline in earnings in the past 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, CNA Financial has lifted its dividend by approximately 24% a year on average. That's interesting, but the combination of a growing dividend despite declining earnings can typically only be achieved by paying out more of the company's profits. This can be valuable for shareholders, but it can't go on forever.

To Sum It Up

From a dividend perspective, should investors buy or avoid CNA Financial? We're not overly enthused to see CNA Financial's earnings in retreat at the same time as the company is paying out more than half of its earnings as dividends to shareholders. These characteristics don't generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.

Curious what other investors think of CNA Financial? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

This article by Simply Wall St is general in nature. 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.

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