The board of Oakley Capital Investments Limited (LON:OCI) has announced that it will pay a dividend on the 13th of October, with investors receiving £0.0225 per share. This payment means the dividend yield will be 1.2%, which is below the average for the industry.

View our latest analysis for Oakley Capital Investments

Oakley Capital Investments' Payment Has Solid Earnings Coverage

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Oakley Capital Investments is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

Over the next year, EPS could expand by 49.1% if recent trends continue. If the dividend continues on this path, the payout ratio could be 1.5% by next year, which we think can be pretty sustainable going forward.

Oakley Capital Investments Is Still Building Its Track Record

The dividend's track record has been pretty solid, but with only 6 years of history we want to see a few more years of history before making any solid conclusions. The payments haven't really changed that much since 6 years ago. We like that the dividend hasn't been shrinking. However we're conscious that the company hasn't got an overly long track record of dividend payments yet, which makes us wary of relying on its dividend income.

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. Oakley Capital Investments has impressed us by growing EPS at 49% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

In Summary

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. While Oakley Capital Investments is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.

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 1 warning sign for Oakley Capital Investments that investors should know about before committing capital to this stock. Is Oakley Capital Investments not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.