Virtus Investment (VRTS) Hikes Dividend: Worth a Look?
Virtus Investment Partners, Inc. VRTS has increased its regular quarterly cash dividend. The company announced a dividend of $1.50 per share, representing an 83% hike from the prior payout. The dividend will be paid out on Nov 12 to shareholders on record as of Oct 29, 2021.
Based on the current dividend, Virtus Investment’s dividend yield currently stands at 2.01%, considering last day’s closing price of $298.92. This marks the fourth consecutive year that the company has hiked its dividend. In 2020 also, it had increased dividend by 22% to 67 cents per share.
Virtus Investment has a share-repurchase authorization in place. As of Jun 30, 2021, 4.9 million shares remained available for buyback. Thus, the company is able to enhance shareholder value through efficient capital-deployment actions.
The company’s shares have rallied 15.8% in the past six months, underperforming the industry’s rise of 24.2%.
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The stock looks attractive based on the regular rise in dividend income amid a challenging operating backdrop. Now let’s check out Virtus Investment’s fundamentals and financial performance before taking any investment decision.
Revenue growth: Organic growth is a key strength for Virtus Investment, as reflected in its revenue growth story. Revenues witnessed an 87.2% CAGR over the last five years (2016-2020), driven by steady increase in assets under management balance and inorganic growth strategies. This June, the company inked a deal to acquire Stone Harbor Investment Partners LP to further enhance and diversify its investment capabilities.
Earlier in February, it entered into an agreement to acquire Westchester Capital Management. Hence, the revenue uptrend is anticipated to continue, with the top line expected to increase 58.7% for 2021 and 20.6% for 2022.
Earnings strength: Virtus Investment witnessed earnings growth of 34.1%, over the last three-five years. This momentum is likely to continue in the near term, as evident from its projected earnings growth rate of 121.5% and 19.8% for 2021 and 2022, respectively.
Also, the stock carries a Growth Score of B. Our research shows that stocks with a Style Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best upside potential.
Superior Return on Equity (ROE): Virtus Investment’s ROE of 27.86%, compared with the industry average of 15.18%, indicates the company’s commendable position over its peers.
Stock seems undervalued: Virtus Investment stock looks undervalued with respect to its price-to-sales (P/S) and price-to-earnings (P/E) ratios. It has a P/E ratio of 8.33 compared with the industry average of 12.03. Also, P/S ratio of 2.9 is below the industry average of 3.29.
Rising expenses: Mounting non-interest expenses are a concern for the company. Over the last five years (2016-2020), expenses witnessed a CAGR of 69.6%. As the company continues to invest in franchise, overall expenses are expected to remain elevated.
Our Take
Based on the above-mentioned factors, it seems to be a wise decision to add Virtus Investment stock to your investment portfolio.
In addition, the Zacks Consensus Estimate for earnings has been revised upward by 9.8% and 15.3% for 2021 and 2022, respectively, over the past 30 days. Further, the stock currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Competitive Landscape
In the past few months, several finance companies have raised their quarterly dividends.
Bank OZK OZK announced a quarterly dividend hike of 1.8% to 28.5 cents per share, while Associated Banc-Corp ASB approved a dividend of 20 cents per share, a hike of 11.1% from the prior payout.
MVB Financial Corp. MVBF announced a dividend of 14 cents per share, marking a hike of 16.7% from the prior payout. The dividend will be paid out on Sep 15 to shareholders of record as of Sep 1, 2021.
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Virtus Investment Partners, Inc. (VRTS) : Free Stock Analysis Report
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