Veritex Holdings' (NASDAQ:VBTX) Dividend Will Be $0.20

Veritex Holdings, Inc. (NASDAQ:VBTX) has announced that it will pay a dividend of $0.20 per share on the 23rd of February. Based on this payment, the dividend yield will be 3.7%, which is fairly typical for the industry.

See our latest analysis for Veritex Holdings

Veritex Holdings' Earnings Will Easily Cover The Distributions

Unless the payments are sustainable, the dividend yield doesn't mean too much.

Having paid out dividends for 5 years, Veritex Holdings has a good history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio of 40%shows that Veritex Holdings would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, EPS is forecast to rise by 21.0% over the next 3 years. Analysts estimate the future payout ratio will be 36% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

Veritex Holdings Is Still Building Its Track Record

Veritex Holdings' dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2019, the annual payment back then was $0.50, compared to the most recent full-year payment of $0.80. This means that it has been growing its distributions at 9.9% per annum over that time. Veritex Holdings has been growing its dividend at a decent rate, and the payments have been stable. However, the payment history is very short, so there is no evidence yet that the dividend can be sustained over a full economic cycle.

Veritex Holdings May Find It Hard To Grow The Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Earnings per share has been crawling upwards at 4.1% per year. Growth of 4.1% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. This could mean the dividend doesn't have the growth potential we look for going into the future.

In Summary

In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for Veritex Holdings that investors need to be conscious of moving forward. Is Veritex Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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