Oakley Capital Investments (LON:OCI) Has Announced A Dividend Of UK£0.022

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.

View our latest analysis for Oakley Capital Investments

Oakley Capital Investments' Earnings Easily Cover the Distributions

Even a low dividend yield can be attractive if it is sustained for years on end. Based on the last payment, Oakley Capital Investments was earning enough to cover the dividend, but free cash flows weren't positive. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

If the trend of the last few years continues, EPS will grow by 18.9% over the next 12 months. 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 Doesn't Have A Long Payment History

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 last annual payment of UK£0.045 was flat on the first annual payment 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

The company's investors will be pleased to have been receiving dividend income for some time. Oakley Capital Investments has seen EPS rising for the last five years, at 19% per annum. Oakley Capital Investments definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Oakley Capital Investments' payments, as there could be some issues with sustaining them into the future. While Oakley Capital Investments is earning enough to cover the payments, the cash flows are lacking. Overall, we don't think this company has the makings of a good income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for Oakley Capital Investments that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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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.
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