Yahoo Finance Virtu Financial, Inc. (NASDAQ:VIRT) Looks Like A Good Stock, And It's Going Ex-Dividend Soon
Virtu Financial, Inc. (NASDAQ:VIRT) stock is about to trade ex-dividend in three days. Investors can purchase shares before the 26th of February in order to be eligible for this dividend, which will be paid on the 15th of March.
Virtu Financial's next dividend payment will be US$0.24 per share, on the back of last year when the company paid a total of US$0.96 to shareholders. Based on the last year's worth of payments, Virtu Financial stock has a trailing yield of around 3.4% on the current share price of $27.98. If you buy this business for its dividend, you should have an idea of whether Virtu Financial's dividend is reliable and sustainable. So we need to investigate whether Virtu Financial can afford its dividend, and if the dividend could grow.
Check out our latest analysis for Virtu Financial
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Virtu Financial is paying out just 18% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see Virtu Financial has grown its earnings rapidly, up 55% a year for the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Virtu Financial's dividend payments are effectively flat on where they were six years ago.
The Bottom Line
Is Virtu Financial worth buying for its dividend? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. Virtu Financial ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.
With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For example, we've found 3 warning signs for Virtu Financial (1 can't be ignored!) that deserve your attention before investing in the shares.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. 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.
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