Veritex Holdings (NASDAQ:VBTX) Has Announced A Dividend Of $0.20

The board of Veritex Holdings, Inc. (NASDAQ:VBTX) has announced that it will pay a dividend of $0.20 per share on the 24th of February. This means the dividend yield will be fairly typical at 2.9%.

See our latest analysis for Veritex Holdings

Veritex Holdings' Dividend Forecasted To Be Well Covered By Earnings

Solid dividend yields are great, but they only really help us if the payment is sustainable.

Veritex Holdings is just starting to establish itself as being able to pay dividends to shareholders, given its short 4-year history of distributing earnings. Diving into the company's earnings report, the payout ratio is set at 29%, which is a decent ratio of dividend payout to earnings, and may sustain future dividends if the company stays at its current trend.

The next 3 years are set to see EPS grow by 30.5%. Analysts forecast the future payout ratio could be 25% over the same time horizon, which is a number we think the company can maintain.

Veritex Holdings Is Still Building Its Track Record

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. Since 2019, the annual payment back then was $0.50, compared to the most recent full-year payment of $0.80. This implies that the company grew its distributions at a yearly rate of about 12% over that duration. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Veritex Holdings has grown earnings per share at 27% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

Veritex Holdings Looks Like A Great Dividend Stock

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. 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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 2 warning signs for Veritex Holdings that investors should take into consideration. 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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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.