Select Water Solutions (NYSE:WTTR) Will Pay 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 16th of August. This payment means that the dividend yield will be 2.0%, which is around the industry average.

See our latest analysis for Select Water Solutions

Select Water Solutions' Earnings Easily Cover The Distributions

We aren't too impressed by dividend yields unless they can be sustained over time. However, Select Water Solutions' earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 128.9%. If the dividend continues on this path, the payout ratio could be 16% by next year, which we think can be pretty sustainable going forward.

historic-dividend

Select Water Solutions Doesn't Have A Long Payment History

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 2 years, which isn't that long in the grand scheme of things. The dividend has gone from an annual total of $0.20 in 2022 to the most recent total annual payment of $0.24. This implies that the company grew its distributions at a yearly rate of about 9.5% over that duration. The dividend has been growing as a reasonable rate, which we like. However, investors will probably want to see a longer track record before they consider Select Water Solutions to be a consistent dividend paying stock.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Select Water Solutions has grown earnings per share at 12% per 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.

Select Water Solutions Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 2 warning signs for Select Water Solutions that investors should take into consideration. 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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