It looks like First Guaranty Bancshares, Inc. (NASDAQ:FGBI) is about to go ex-dividend in the next 3 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. 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 First Guaranty Bancshares' shares on or after the 27th of December, you won't be eligible to receive the dividend, when it is paid on the 31st of December.

The company's next dividend payment will be US$0.01 per share, on the back of last year when the company paid a total of US$0.32 to shareholders. Based on the last year's worth of payments, First Guaranty Bancshares has a trailing yield of 2.7% on the current stock price of US$12.02. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for First Guaranty Bancshares

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. First Guaranty Bancshares is paying out an acceptable 66% of its profit, a common payout level among most companies.

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.

Click here to see how much of its profit First Guaranty Bancshares paid out over the last 12 months.

Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're discomforted by First Guaranty Bancshares's 9.0% per annum decline in earnings in the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

First Guaranty Bancshares also issued more than 5% of its market cap in new stock during the past year, which we feel is likely to hurt its dividend prospects in the long run. Trying to grow the dividend while issuing large amounts of new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill.