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Virtus Investment Partners (VRTS) Could Be a Great Choice

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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Virtus Investment Partners in Focus

Headquartered in Hartford, Virtus Investment Partners (VRTS - Free Report) is a Finance stock that has seen a price change of -2.99% so far this year. The asset management company is currently shelling out a dividend of $1.9 per share, with a dividend yield of 3.24%. This compares to the Financial - Investment Management industry's yield of 2.67% and the S&P 500's yield of 1.58%.

Looking at dividend growth, the company's current annualized dividend of $7.60 is up 10.9% from last year. Over the last 5 years, Virtus Investment Partners has increased its dividend 5 times on a year-over-year basis for an average annual increase of 34.10%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Virtus's current payout ratio is 33%, meaning it paid out 33% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for VRTS for this fiscal year. The Zacks Consensus Estimate for 2024 is $26.43 per share, representing a year-over-year earnings growth rate of 20.41%.

Bottom Line

From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. However, not all companies offer a quarterly payout.

Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, VRTS is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).

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