For many investors, dividends are a vital component of wealth accumulation. If you’re among those who actively seek out dividends, you’ll want to note that Virtu Financial, Inc. (NASDAQ:VIRT) will soon enter its ex-dividend period in just four days. The ex-dividend date is critical as it precedes the record date, which determines who qualifies to receive the upcoming dividend. To be eligible, you need to purchase shares of Virtu Financial before February 28th, with dividends being disbursed on March 17th.
The forthcoming dividend payment will amount to US$0.24 per share, building upon last year’s total of US$0.96 distributed to shareholders. With last year’s dividends considered, Virtu Financial offers a trailing yield of approximately 2.7% based on the current share price of US$35.39. For long-term shareholders, dividends can significantly enhance investment returns, provided these payments remain consistent. Thus, it’s essential to investigate whether Virtu Financial has a history of increasing its dividends or if a reduction might be imminent.
For further insights, be sure to check out our latest analysis for Virtu Financial.
Dividends typically stem from a company’s profits. Hence, if a firm disburses more than it earns, there’s a heightened risk of dividend cuts. Thankfully, Virtu Financial maintains a relatively low payout ratio of just 30% of its profits.
In general, a lower payout ratio is indicative of a more sustainable dividend.
Click here to review the company’s payout ratio and projections from analysts regarding future dividends.
As company earnings wane, the analysis and ownership of dividend stocks become trickier. A reduction in earnings could force a company to slash its dividend, jeopardizing investor value. Virtu Financial has seen its earnings per share decline at a rate of approximately 9.0% annually over the past five years, raising concerns about the sustainability of its dividend.
Evaluating a company’s dividend prospects often involves looking at its historical growth rate. In this case, Virtu Financial’s dividend payouts have remained relatively stagnant over the past decade. When dividends remain unchanged in a declining earnings environment, it typically suggests the company is either distributing a larger portion of its earnings or drawing on cash reserves or debt—neither of which are ideal circumstances.
