Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But 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 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.
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 5.58%. The investment management firm is currently shelling out a dividend of $0.49 per share, with a dividend yield of 2.94%. This compares to the Financial - Investment Management industry's yield of 2.83% and the S&P 500's yield of 1.43%.
Looking at dividend growth, the company's current annualized dividend of $1.96 is up 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 31%, meaning it paid out 31% 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 $6.87 per share, with earnings expected to increase 7.68% from the year ago period.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers 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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, VCTR 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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Victory Capital Holdings, Inc. (VCTR): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).