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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.

Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a 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

Based in Hartford, Virtus Investment Partners (VRTS - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -15.15%. The asset management company is currently shelling out a dividend of $1.9 per share, with a dividend yield of 3.7%. This compares to the Financial - Investment Management industry's yield of 2.95% and the S&P 500's yield of 1.5%.

Looking at dividend growth, the company's current annualized dividend of $7.60 is up 10.9% from last year. In the past five-year period, Virtus Investment Partners has increased its dividend 5 times on a year-over-year basis for an average annual increase of 32.89%. Future dividend growth will depend on earnings growth as well as 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 31%. This means it paid out 31% 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 $25.90 per share, with earnings expected to increase 18% from the year ago period.

Bottom Line

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.

For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that VRTS is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).


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