Veritex Holdings, Inc. (NASDAQ:VBTX) is about to trade ex-dividend in the next 3 days. This means that investors who purchase shares on or after the 5th of February will not receive the dividend, which will be paid on the 20th of February.
Veritex Holdings's next dividend payment will be US$0.17 per share, and in the last 12 months, the company paid a total of US$0.68 per share. Calculating the last year's worth of payments shows that Veritex Holdings has a trailing yield of 2.4% on the current share price of $28.32. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Veritex Holdings has been able to grow its dividends, or if the dividend might be cut.
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Fortunately Veritex Holdings's payout ratio is modest, at just 29% of profit.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see Veritex Holdings's earnings per share have risen 18% per annum over the last five years.
Given that Veritex Holdings has only been paying a dividend for a year, there's not much of a past history to draw insight from.
To Sum It Up
From a dividend perspective, should investors buy or avoid Veritex Holdings? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. In summary, Veritex Holdings appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
Wondering what the future holds for Veritex Holdings? See what the five analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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