Virtus Investment Partners (NASDAQ:VRTS) Has Announced That It Will Be Increasing Its Dividend To $1.90

Virtus Investment Partners, Inc. (NASDAQ:VRTS) has announced that it will be increasing its dividend from last year's comparable payment on the 15th of November to $1.90. This takes the dividend yield to 3.8%, which shareholders will be pleased with.

Check out our latest analysis for Virtus Investment Partners

Virtus Investment Partners' Earnings Easily Cover The Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, prior to this announcement, Virtus Investment Partners' dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share could rise by 16.7% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 37% by next year, which we think can be pretty sustainable going forward.

Virtus Investment Partners Is Still Building Its Track Record

Virtus Investment Partners' 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 2014, the annual payment back then was $1.80, compared to the most recent full-year payment of $7.60. This means that it has been growing its distributions at 17% per annum over that time. Virtus Investment Partners has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

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 Virtus Investment Partners has grown earnings per share at 17% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Virtus Investment Partners' prospects of growing its dividend payments in the future.

Virtus Investment Partners Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for Virtus Investment Partners that investors need to be conscious of moving forward. Is Virtus Investment Partners 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.