Home Bancshares, Inc. (Conway, AR) (NYSE:HOMB) stock is about to trade ex-dividend in 4 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order 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. Therefore, if you purchase Home Bancshares (Conway AR)'s shares on or after the 14th of May, you won't be eligible to receive the dividend, when it is paid on the 5th of June.

The company's next dividend payment will be US$0.18 per share. Last year, in total, the company distributed US$0.72 to shareholders. Looking at the last 12 months of distributions, Home Bancshares (Conway AR) has a trailing yield of approximately 2.9% on its current stock price of US$24.62. If you buy this business for its dividend, you should have an idea of whether Home Bancshares (Conway AR)'s dividend is reliable and sustainable. So we need to investigate whether Home Bancshares (Conway AR) can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Home Bancshares (Conway AR)

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Home Bancshares (Conway AR)'s payout ratio is modest, at just 37% of profit.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at Home Bancshares (Conway AR), with earnings per share up 2.4% on average over the last five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, Home Bancshares (Conway AR) has lifted its dividend by approximately 17% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

To Sum It Up

From a dividend perspective, should investors buy or avoid Home Bancshares (Conway AR)? Home Bancshares (Conway AR) has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. We think this is a pretty attractive combination, and would be interested in investigating Home Bancshares (Conway AR) more closely.

On that note, you'll want to research what risks Home Bancshares (Conway AR) is facing. To help with this, we've discovered 1 warning sign for Home Bancshares (Conway AR) that you should be aware of before investing in their shares.

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.