Yahoo Finance Enterprise Financial Services' (NASDAQ:EFSC) Upcoming Dividend Will Be Larger Than Last Year's
The board of Enterprise Financial Services Corp (NASDAQ:EFSC) has announced that it will be increasing its dividend by 4.0% on the 28th of June to $0.26, up from last year's comparable payment of $0.25. This takes the annual payment to 2.6% of the current stock price, which is about average for the industry.
View our latest analysis for Enterprise Financial Services
Enterprise Financial Services' Payment Expected To Have Solid Earnings Coverage
We aren't too impressed by dividend yields unless they can be sustained over time.
Having distributed dividends for at least 10 years, Enterprise Financial Services has a long history of paying out a part of its earnings to shareholders. Using data from its latest earnings report, Enterprise Financial Services' payout ratio sits at 21%, an extremely comfortable number that shows that it can pay its dividend.
Over the next year, EPS is forecast to fall by 2.8%. But if the dividend continues along recent trends, we estimate the future payout ratio could be 26%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.
Enterprise Financial Services Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of $0.21 in 2014 to the most recent total annual payment of $1.00. This implies that the company grew its distributions at a yearly rate of about 17% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.
We Could See Enterprise Financial Services' Dividend Growing
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Enterprise Financial Services has grown earnings per share at 5.2% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Enterprise Financial Services' prospects of growing its dividend payments in the future.
Enterprise Financial Services Looks Like A Great Dividend Stock
Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The earnings easily cover the company's distributions, and the company is generating plenty of cash. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for Enterprise Financial Services that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
