On the 06 May 2019, HEXPOL AB (publ) (STO:HPOL B) will be paying shareholders an upcoming dividend amount of kr2.25 per share. However, investors must have bought the company's stock before 29 April 2019 in order to qualify for the payment. That means you have only 3 days left! Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let's take a look at HEXPOL's most recent financial data to examine its dividend characteristics in more detail.

View our latest analysis for HEXPOL

How I analyze a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

• Does it pay an annual yield higher than 75% of dividend payers?

• Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?

• Has dividend per share amount increased over the past?

• Can it afford to pay the current rate of dividends from its earnings?

• Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

Does HEXPOL pass our checks?

The current trailing twelve-month payout ratio for the stock is 47%, which means that the dividend is covered by earnings. Going forward, analysts expect HPOL B's payout to increase to 62% of its earnings. Assuming a constant share price, this equates to a dividend yield of 3.8%. In addition to this, EPS should increase to SEK5.19. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.

When considering the sustainability of dividends, it is also worth checking the cash flow of a company. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.

If there's one type of stock you want to be reliable, it's dividend stocks and their stable income-generating ability. The reality is that it is too early to consider HEXPOL as a dividend investment. It has only been consistently paying dividends for 9 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

In terms of its peers, HEXPOL produces a yield of 2.6%, which is on the low-side for Chemicals stocks.

Next Steps:

If HEXPOL is in your portfolio for cash-generating reasons, there may be better alternatives out there. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company's fundamentals and underlying business before making an investment decision. I've put together three key factors you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for HPOL B’s future growth? Take a look at our free research report of analyst consensus for HPOL B’s outlook.

2. Valuation: What is HPOL B worth today? Even if the stock is a cash cow, it's not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether HPOL B is currently mispriced by the market.

3. Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.