Virtus Investment Partners' (NYSE:VRTS) Shareholders Will Receive A Bigger Dividend Than Last Year

Virtus Investment Partners, Inc. (NYSE:VRTS) will increase its dividend from last year's comparable payment on the 14th of November to $2.40. This takes the dividend yield to 5.2%, which shareholders will be pleased with.

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Virtus Investment Partners' Projected Earnings Seem Likely To Cover Future Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, Virtus Investment Partners' dividend was only 43% of earnings, however it was paying out 206% of free cash flows. This signals that the company is more focused on returning cash flow to shareholders, but it could mean that the dividend is exposed to cuts in the future.

If the trend of the last few years continues, EPS will grow by 25.6% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 40%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for Virtus Investment Partners

Virtus Investment Partners Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $1.80 in 2015, and the most recent fiscal year payment was $9.60. This means that it has been growing its distributions at 18% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

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 Virtus Investment Partners has been growing its earnings per share at 26% a year over the past five years. The company's earnings per share has grown rapidly in recent years, and it has a good balance between reinvesting and paying dividends to shareholders, so we think that Virtus Investment Partners could prove to be a strong dividend payer.

In Summary

In summary, while it's always good to see the dividend being raised, we don't think Virtus Investment Partners' payments are rock solid. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We don't think Virtus Investment Partners is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. 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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