Home Federal Bancorp, Inc. of Louisiana (NASDAQ:HFBL) is about to trade ex-dividend in the next 4 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 because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Meaning, you will need to purchase Home Federal Bancorp of Louisiana's shares before the 27th of January to receive the dividend, which will be paid on the 10th of February.

The company's upcoming dividend is US$0.13 a share, following on from the last 12 months, when the company distributed a total of US$0.52 per share to shareholders. Calculating the last year's worth of payments shows that Home Federal Bancorp of Louisiana has a trailing yield of 4.1% on the current share price of US$12.8187. If you buy this business for its dividend, you should have an idea of whether Home Federal Bancorp of Louisiana's dividend is reliable and sustainable. As a result, readers should always check whether Home Federal Bancorp of Louisiana has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Home Federal Bancorp of Louisiana

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Home Federal Bancorp of Louisiana's payout ratio is modest, at just 46% of profit.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see how much of its profit Home Federal Bancorp of Louisiana paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. So we're not too excited that Home Federal Bancorp of Louisiana's earnings are down 4.1% a year over the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, Home Federal Bancorp of Louisiana has increased its dividend at approximately 16% a year on average.

Final Takeaway

Has Home Federal Bancorp of Louisiana got what it takes to maintain its dividend payments? Home Federal Bancorp of Louisiana's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're on the fence about its dividend prospects.

If you're not too concerned about Home Federal Bancorp of Louisiana's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. Case in point: We've spotted 1 warning sign for Home Federal Bancorp of Louisiana you should be aware of.

If you're in the market for strong dividend payers, we recommend checking 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.