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

Veritex Holdings, Inc. (NASDAQ:VBTX) will pay a dividend of $0.20 on the 25th of August. This means that the annual payment will be 3.7% of the current stock price, which is in line with the average for the industry.

View 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 only 4 years, Veritex Holdings does not have much of a history being a dividend paying company. Based on Veritex Holdings' last earnings report, calculating for its payout ratio equates to 28%, which means that the company covered its last dividend with comfortable room to spare.

Looking forward, earnings per share is forecast to fall by 2.9% over the next year. But if the dividend continues along recent trends, we estimate the future payout ratio could be 35%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.

Veritex Holdings Doesn't Have A Long Payment History

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. Since 2019, the dividend has gone from $0.50 total annually to $0.80. This means that it has been growing its distributions at 12% per annum over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Veritex Holdings has been growing its earnings per share at 18% a year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

We Really Like Veritex Holdings' Dividend

Overall, we like to see the dividend staying consistent, and we think Veritex Holdings might even raise payments in the future. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 2 warning signs for Veritex Holdings (of which 1 is potentially serious!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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