Virtus Investment Partners (NASDAQ:VRTS) Has Announced That It Will Be Increasing Its Dividend To $1.65

Virtus Investment Partners, Inc. (NASDAQ:VRTS) will increase its dividend from last year's comparable payment on the 15th of November to $1.65. The payment will take the dividend yield to 2.8%, which is in line with the average for the industry.

Check out our latest analysis for Virtus Investment Partners

Virtus Investment Partners' Payment Has Solid Earnings Coverage

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. However, Virtus Investment Partners' earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 32.8% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the payout ratio could be 25% by next year, which is in a pretty sustainable range.

Virtus Investment Partners Is Still Building Its Track Record

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The annual payment during the last 8 years was $1.80 in 2014, and the most recent fiscal year payment was $6.00. This implies that the company grew its distributions at a yearly rate of about 16% over that duration. 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. Virtus Investment Partners has seen EPS rising for the last five years, at 33% per annum. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

Virtus Investment Partners Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for Virtus Investment Partners that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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