Vodacom Group Limited (JSE:VOD) is about to trade ex-dividend in the next four days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Thus, you can purchase Vodacom Group's shares before the 29th of November in order to receive the dividend, which the company will pay on the 4th of December.

The company's next dividend payment will be R3.05 per share. Last year, in total, the company distributed R6.70 to shareholders. Calculating the last year's worth of payments shows that Vodacom Group has a trailing yield of 6.3% on the current share price of ZAR105.54. If you buy this business for its dividend, you should have an idea of whether Vodacom Group's dividend is reliable and sustainable. So we need to investigate whether Vodacom Group can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Vodacom Group

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Vodacom Group paid out 69% of its earnings to investors last year, a normal payout level for most businesses. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Thankfully its dividend payments took up just 48% of the free cash flow it generated, which is a comfortable payout ratio.

It's positive to see that Vodacom Group's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

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

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings fall far enough, the company could be forced to cut its dividend. That explains why we're not overly excited about Vodacom Group's flat earnings over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.