Oakley Capital Investments Limited (LON:OCI) has announced that it will pay a dividend of UK£0.022 per share on the 14th of October. Including this payment, the dividend yield on the stock will be 1.3%, which is a modest boost for shareholders’ returns.
Oakley Capital Investments’ Earnings Easily Cover the Distributions
Even a low dividend yield can be attractive if it is sustained for years on end. Prior to this announcement, Oakley Capital Investments’ earnings easily covered the dividend, but free cash flows were negative. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.
Over the next year, EPS could expand by 18.9% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 4.2%, which is in the range that makes us comfortable with the sustainability of the dividend.
Oakley Capital Investments Is Still Building Its Track Record
Oakley Capital Investments’ dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The payments haven’t really changed that much since 5 years ago. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn’t want to rely on this dividend too much.
The Dividend Looks Likely To Grow
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It’s encouraging to see Oakley Capital Investments has been growing its earnings per share at 19% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Oakley Capital Investments’ prospects of growing its dividend payments in the future.
Our Thoughts On Oakley Capital Investments’ Dividend
Overall, we don’t think this company makes a great dividend stock, even though the dividend wasn’t cut this year. While the low payout ratio is redeeming feature, this is offset by the minimal cash to cover the payments. We don’t think Oakley Capital Investments is a great stock to add to your portfolio if income is your focus.
It’s important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we’ve picked out 1 warning sign for Oakley Capital Investments that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.
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.
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