The advice of Oakley Capital Investments Limited (LON:OCI) announced it would pay a dividend on October 13, with investors receiving £0.0225 per share. This payout means the dividend yield will be 1.2%, which is below the industry average.
See our latest analysis for Oakley Capital Investments
Oakley Capital Investments income easily covers distributions
Even a low dividend yield can be attractive if it persists for years. Based on the last payout, Oakley Capital Investments was earning enough to cover the dividend, but free cash flow was not positive. Since the company does not provide cash, payment to shareholders will become difficult at some point.
If the trend of recent years continues, EPS will increase by 49.1% over the next 12 months. Assuming the dividend continues on recent trends, we think the payout ratio could be 1.5% by next year, which is in a fairly sustainable range.
Oakley Capital Investments is still building its balance sheet
The dividend track record has been pretty strong, but with only 6 years of history, we want to see a few more years before drawing any solid conclusions. Payments haven’t really changed much in 6 years. Oakley Capital Investments hasn’t been paying a dividend for a very long time, so we wouldn’t be excited about its record growth just yet.
The dividend should increase
Investors might be attracted to the stock because of the quality of its payment history. Oakley Capital Investments has seen EPS grow over the past five years, at 49% annually. A low payout ratio gives the company great flexibility, and the growth in earnings also allows it to increase the dividend very easily.
Overall, it’s nice to see consistent dividend payout, but we believe that over the longer term, the current level of payout may be unsustainable. With no cash flow, it’s hard to see how the company can sustain a dividend payment. We would be a bit cautious to rely on this stock primarily for dividend income.
Companies with a stable dividend policy are likely to enjoy greater investor interest than those that suffer from a more inconsistent approach. Yet investors must consider a host of other factors, aside from dividend payments, when analyzing a company. Pushing the debate a little further, we have identified 1 warning sign for Oakley Capital Investments that investors should be aware of going forward. Looking for more high yield dividend ideas? Try our collection of strong dividend payers.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.
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