Oxford Instruments plc (LON:OXIG) will increase its dividend from last year's comparable payment on the 19th of August to £0.171. Even though the dividend went up, the yield is still quite low at only 1.2%.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Oxford Instruments' Projected Earnings Seem Likely To Cover Future Distributions

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. The last dividend was quite easily covered by Oxford Instruments' earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Over the next year, EPS is forecast to expand by 153.8%. Assuming the dividend continues along recent trends, we think the payout ratio could be 21% by next year, which is in a pretty sustainable range.LSE:OXIG Historic Dividend June 25th 2025

View our latest analysis for Oxford Instruments

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2015, the annual payment back then was £0.124, compared to the most recent full-year payment of £0.222. This implies that the company grew its distributions at a yearly rate of about 6.0% over that duration. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Oxford Instruments might have put its house in order since then, but we remain cautious.

Oxford Instruments May Find It Hard To Grow The Dividend

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Oxford Instruments has seen earnings per share falling at 4.4% per year over the last five years. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this can turn into a longer term trend.

Our Thoughts On Oxford Instruments' Dividend

Overall, we always like to see the dividend being raised, but we don't think Oxford Instruments will make a great income stock. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We don't think Oxford Instruments is a great stock to add to your portfolio if income is your focus.

Story Continues

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 Oxford Instruments that investors need to be conscious of moving forward. 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.

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