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Victory Capital (VCTR) Rewards Investors With 11% Dividend Hike

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Victory Capital Holdings, Inc. (VCTR - Free Report) has announced a sequential increase in its quarterly dividend. The company declared a quarterly cash dividend of 41 cents per share, marking an increase of 11% from the prior payout. The dividend will be paid out on Sep 25 to shareholders of record as of Sep 10, 2024.

The dividend hike was announced along with its second-quarter 2024 earnings update.

The company has increased its dividend 11 times during the last five years. Before the recent hike, VCTR increased its dividend by 5% to 34 cents per share in February 2024. Currently, its payout ratio is 31% of earnings. This indicates that it retains adequate earnings for reinvestment and future growth initiatives while still delivering lucrative returns to its shareholders.

Considering VCTR’s closing price of $49 on Aug 9, its dividend yield is currently pegged at 3.3%.

Q2 Earnings at a Glance

Victory Capital reported second-quarter 2024 earnings per share of $1.31, which surpassed the Zacks Consensus Estimate of $1.29. Also, the bottom line compared favorably with $1.11 reported in the year-ago quarter.

Net income attributable to common shareholders was $74.3 million, up 31% from the prior-year quarter.

Total revenues were $219 million, which increased 7.5% year over year. This was supported by a rise in management investment fees and fund administration and distribution fees. 

Total assets under management were $168.7 billion, up 7.3% from the prior-year quarter.

Capital Distribution Seems Sustainable

Apart from regular dividend payouts, the company also has a share repurchase program in place. In December 2023, the company’s board of directors authorized the repurchase of up to $100 million of its common shares. In the first half of 2024, the company did not repurchase any shares. As of Jun 30, 2024, $95.2 million shares remained available under the authorization.
 
Moreover, VCTR enjoys a decent liquidity position. As of Jun 30, 2024, the company had a total cash and cash equivalents of $118 million, up from $79.9 million reported in the prior quarter. As of Jun 30, 2024, the total debt was $992 million, which includes $981.7 million in long-term debts. The total debt decreased from $1 billion as of Mar 31, 2024. Given its improving liquidity position, the company is expected to sustain capital distribution activities and enhance shareholder value.

Over the past six months, shares of Victory Capital have gained 40.4% compared with the industry’s growth of 3.9%.
 

Zacks Investment Research
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Currently, VCTR carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Finance Firms Taking Similar Steps

In July 2024, State Street Corp. (STT - Free Report) hiked its quarterly cash dividend. The company declared a quarterly cash dividend of 76 cents per share, marking an increase of 10.1% from the prior payout. The dividend will be paid out on Oct 11 to shareholders of record as of Oct 1.

This hike is in line with the company’s previous announcement to increase its dividend post its stress test 2024 results. The results demonstrated that STT’s stress capital buffer was well below the 2.5% minimum while its common equity tier 1 ratio requirement was maintained at 8%. This reinforces the financial strength and resiliency of the company under adverse circumstances.

In the same month, FS Bancorp, Inc. (FSBW - Free Report) also announced a quarterly dividend hike and an additional share repurchase program. The company declared a dividend of 27 cents per share, reflecting a 3.8% increase from the prior payout. The dividend will be paid out on Aug 21, 2024, to shareholders of record as of Aug 7.

The company has been paying quarterly cash dividends for 46 quarters. Currently, FSBW’s payout ratio is 22% of its earnings. This indicates that it retains adequate earnings for reinvestment and future growth initiatives while still delivering decent returns to its shareholders.


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