Octopus Renewables Infrastructure Trust (LON:ORIT) Has Announced A Dividend Of £0.0154

The board of Octopus Renewables Infrastructure Trust plc (LON:ORIT) has announced that it will pay a dividend on the 29th of August, with investors receiving £0.0154 per share. This means the annual payment is 8.6% of the current stock price, which is above the average for the industry.

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Octopus Renewables Infrastructure Trust's Projections Indicate Future Payments May Be Unsustainable

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Based on the last payment, the dividend made up 75% of cash flows, but a higher proportion of net income. The company could be more focused on returning cash to shareholders, but this could indicate that growth opportunities are few and far between.

Looking forward, EPS could fall by 0.2% if the company can't turn things around from the last few years. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 315%, which is definitely a bit high to be sustainable going forward.

Check out our latest analysis for Octopus Renewables Infrastructure Trust

Octopus Renewables Infrastructure Trust Is Still Building Its Track Record

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2020, the annual payment back then was £0.0424, compared to the most recent full-year payment of £0.0602. This means that it has been growing its distributions at 7.3% per annum over that time. Investors will likely want to see a longer track record of growth before making decision to add this to their income portfolio.

Octopus Renewables Infrastructure Trust May Find It Hard To Grow The Dividend

Investors could be attracted to the stock based on the quality of its payment history. However, things aren't all that rosy. Although it's important to note that Octopus Renewables Infrastructure Trust's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time.

The Dividend Could Prove To Be Unreliable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The track record isn't great, and the payments are a bit high to be considered sustainable. We don't think Octopus Renewables Infrastructure Trust is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 2 warning signs for Octopus Renewables Infrastructure Trust (1 doesn't sit too well with us!) that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield 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.