Select Water Solutions (NYSE:WTTR) Is Paying Out A Dividend Of $0.06

Select Water Solutions, Inc. (NYSE:WTTR) has announced that it will pay a dividend of $0.06 per share on the 15th of May. This means the dividend yield will be fairly typical at 2.5%.

Check out our latest analysis for Select Water Solutions

Select Water Solutions' Payment Has Solid Earnings Coverage

We aren't too impressed by dividend yields unless they can be sustained over time. However, prior to this announcement, Select Water Solutions' dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 71.3%. If the dividend continues along recent trends, we estimate the payout ratio will be 19%, which is in the range that makes us comfortable with the sustainability of the dividend.

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Select Water Solutions Doesn't Have A Long Payment History

Without a track record of dividend payments, we can't make a judgement on how stable it has been. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

We Could See Select Water Solutions' Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Select Water Solutions has been growing its earnings per share at 7.9% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Select Water Solutions' prospects of growing its dividend payments in the future.

In Summary

Overall, a consistent dividend is a good thing, and we think that Select Water Solutions has the ability to continue this into the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

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. As an example, we've identified 3 warning signs for Select Water Solutions that you should be aware of before investing. Is Select Water Solutions not quite the opportunity you were looking for? Why not check out our selection of top 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.