In This Article:
Veritex Holdings, Inc. (NASDAQ:VBTX) has announced that it will be increasing its dividend from last year's comparable payment on the 22nd of May to $0.22. This takes the annual payment to 3.8% of the current stock price, which is about average for the industry.
Veritex Holdings' Dividend Forecasted To Be Well Covered By Earnings
Unless the payments are sustainable, the dividend yield doesn't mean too much.
Veritex Holdings has established itself as a dividend paying company, given its 6-year history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio of 40%shows that Veritex Holdings would be able to pay its last dividend without pressure on the balance sheet.
Looking forward, earnings per share is forecast to rise by 8.3% over the next year. If the dividend continues along recent trends, we estimate the future payout ratio will be 41%, which is in the range that makes us comfortable with the sustainability of the dividend.
View our latest analysis for Veritex Holdings
Veritex Holdings Is Still Building Its Track Record
The dividend's track record has been pretty solid, but with only 6 years of history we want to see a few more years of history before making any solid conclusions. The dividend has gone from an annual total of $0.50 in 2019 to the most recent total annual payment of $0.88. This means that it has been growing its distributions at 9.9% per annum over that time. Investors will likely want to see a longer track record of growth before making decision to add this to their income portfolio.
Dividend Growth May Be Hard To Achieve
Investors could be attracted to the stock based on the quality of its payment history. Earnings has been rising at 4.3% per annum over the last five years, which admittedly is a bit slow. If Veritex Holdings is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.
Our Thoughts On Veritex Holdings' Dividend
Overall, it's great to see the dividend being raised and that it is still in a sustainable range. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.