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Here's What We Like About Virtus Investment Partners' (NASDAQ:VRTS) Upcoming Dividend

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Virtus Investment Partners, Inc. (NASDAQ:VRTS) stock is about to trade ex-dividend in 4 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Accordingly, Virtus Investment Partners investors that purchase the stock on or after the 27th of January will not receive the dividend, which will be paid on the 11th of February.

The company's next dividend payment will be US$1.50 per share, and in the last 12 months, the company paid a total of US$6.00 per share. Based on the last year's worth of payments, Virtus Investment Partners has a trailing yield of 2.3% on the current stock price of $261.51. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Virtus Investment Partners

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Virtus Investment Partners has a low and conservative payout ratio of just 15% of its income after tax.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
historic-dividend

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see Virtus Investment Partners has grown its earnings rapidly, up 46% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Virtus Investment Partners has delivered 16% dividend growth per year on average over the past eight years. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

To Sum It Up

Is Virtus Investment Partners an attractive dividend stock, or better left on the shelf? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. We think this is a pretty attractive combination, and would be interested in investigating Virtus Investment Partners more closely.

In light of that, while Virtus Investment Partners has an appealing dividend, it's worth knowing the risks involved with this stock. For example - Virtus Investment Partners has 3 warning signs we think you should be aware of.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.