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 24th of May. This makes the dividend yield 3.9%, which will augment investor returns quite nicely.

See our latest analysis for Veritex Holdings

Veritex Holdings' Payment Expected To Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much.

Having paid out dividends for 5 years, Veritex Holdings has a good history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Veritex Holdings' payout ratio of 46% is a good sign for current shareholders as this means that earnings decently cover dividends.

Over the next year, EPS is forecast to expand by 17.0%. Assuming the dividend continues along recent trends, we think the future payout ratio could be 46% by next year, which is in a pretty sustainable range.

Veritex Holdings Doesn't Have A Long Payment History

The dividend's track record has been pretty solid, but with only 5 years of history we want to see a few more years of history before making any solid conclusions. Since 2019, the annual payment back then was $0.50, compared to the most recent full-year payment of $0.80. This works out to be a compound annual growth rate (CAGR) of approximately 9.9% a year 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.

We Could See Veritex Holdings' Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Veritex Holdings has seen EPS rising for the last five years, at 8.5% per annum. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

Veritex Holdings Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Veritex Holdings might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 2 warning signs for Veritex Holdings that you should be aware of before investing. 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.