Solaris Oilfield Infrastructure (NYSE:SOI) Is Due To Pay A Dividend Of US$0.10

By
Simply Wall St
Published
August 23, 2021
NYSE:SOI
Source: Shutterstock

The board of Solaris Oilfield Infrastructure, Inc. (NYSE:SOI) has announced that it will pay a dividend on the 24th of September, with investors receiving US$0.10 per share. This makes the dividend yield 6.0%, which will augment investor returns quite nicely.

Check out our latest analysis for Solaris Oilfield Infrastructure

Solaris Oilfield Infrastructure Might Find It Hard To Continue The Dividend

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. The company is paying out a large amount of its cash flows, even though it isn't generating any profit. These payout levels would generally be quite difficult to keep up.

Recent, EPS has fallen by 18.7%, so this could continue over the next year. This will push the company into unprofitability, which means the managers will have to choose between suspending the dividend, or paying it out of cash reserves.

historic-dividend
NYSE:SOI Historic Dividend August 23rd 2021

Solaris Oilfield Infrastructure Doesn't Have A Long Payment History

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. The first annual payment during the last 3 years was US$0.40 in 2018, and the most recent fiscal year payment was US$0.42. This works out to be a compound annual growth rate (CAGR) of approximately 1.6% a year over that time. Solaris Oilfield Infrastructure hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.

Dividend Growth Potential Is Shaky

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Let's not jump to conclusions as things might not be as good as they appear on the surface. Solaris Oilfield Infrastructure's earnings per share has shrunk at 19% a year over the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

Solaris Oilfield Infrastructure's Dividend Doesn't Look Great

In summary, while it is good to see that the dividend hasn't been cut, we think that at current levels the payment isn't particularly sustainable. The company isn't making enough to be paying as much as it is, and the other factors don't look particularly promising either. Overall, this doesn't get us very excited from an income standpoint.

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 picked out 2 warning signs for Solaris Oilfield Infrastructure that investors should know about before committing capital to this stock. We have also put together a list of global stocks with a solid dividend.

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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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