Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and, of course, 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Based in San Antonio, Victory Capital Holdings (VCTR) is in the Finance sector, and so far this year, shares have seen a price change of 45.79%. The investment management firm is currently shelling out a dividend of $0.50 per share, with a dividend yield of 2.17%. This compares to the Financial - Investment Management industry's yield of 2.76% and the S&P 500's yield of 1.33%.
Looking at dividend growth, the company's current annualized dividend of $2.00 is up 3.1% from last year. Over the last 5 years, Victory Capital Holdings has increased its dividend 5 times on a year-over-year basis for an average annual increase of 48.75%. 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. Victory Capital's current payout ratio is 29%, meaning it paid out 29% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for VCTR for this fiscal year. The Zacks Consensus Estimate for 2026 is $7.41 per share, which represents a year-over-year growth rate of 16.14%.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. 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 VCTR is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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Victory Capital Holdings, Inc. (VCTR): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).