Hatsun Agro Product (NSE:HATSUN) Is Due To Pay A Dividend Of ₹6.00

Hatsun Agro Product Limited (NSE:HATSUN) will pay a dividend of ₹6.00 on the 18th of August. Including this payment, the dividend yield on the stock will be 0.6%, which is a modest boost for shareholders' returns.

See our latest analysis for Hatsun Agro Product

Hatsun Agro Product's Payment Has Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. The last dividend was quite easily covered by Hatsun Agro Product's earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Over the next year, EPS is forecast to expand by 43.7%. If the dividend continues along recent trends, we estimate the payout ratio will be 53%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was ₹0.536 in 2013, and the most recent fiscal year payment was ₹6.00. This works out to be a compound annual growth rate (CAGR) of approximately 27% a year over that time. Hatsun Agro Product has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's encouraging to see that Hatsun Agro Product has been growing its earnings per share at 14% a year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

We Really Like Hatsun Agro Product's Dividend

Overall, we like to see the dividend staying consistent, and we think Hatsun Agro Product might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 3 warning signs for Hatsun Agro Product (of which 1 is a bit unpleasant!) you should know about. Is Hatsun Agro Product not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.