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Hatsun Agro Product Limited (NSE:HATSUN) stock is about to trade ex-dividend in 3 days time. Ex-dividend means that investors that purchase the stock on or after the 25th of July will not receive this dividend, which will be paid on the 16th of August.

Hatsun Agro Product's next dividend payment will be ₹2.00 per share, on the back of last year when the company paid a total of ₹4.00 to shareholders. Last year's total dividend payments show that Hatsun Agro Product has a trailing yield of 0.6% on the current share price of ₹745.65. If you buy this business for its dividend, you should have an idea of whether Hatsun Agro Product's dividend is reliable and sustainable. So we need to investigate whether Hatsun Agro Product can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Hatsun Agro Product

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. Hatsun Agro Product paid out 51% of its earnings to investors last year, a normal payout level for most businesses. Hatsun Agro Product paid a dividend despite reporting negative free cash flow last year. That's typically a bad combination and - if this were more than a one-off - not sustainable.

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 fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see Hatsun Agro Product earnings per share are up 7.9% per annum over the last five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last 7 years, Hatsun Agro Product has lifted its dividend by approximately 34% 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.

To Sum It Up

Is Hatsun Agro Product an attractive dividend stock, or better left on the shelf? Earnings per share growth has been modest and Hatsun Agro Product paid out over half of its profits and less than half of its free cash flow, although both payout ratios are within normal limits. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.

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

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

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.