Enterprise Financial Services (NASDAQ:EFSC) Will Pay A Larger Dividend Than Last Year At $0.24
Enterprise Financial Services Corp (NASDAQ:EFSC) has announced that it will be increasing its dividend from last year's comparable payment on the 30th of December to $0.24. Despite this raise, the dividend yield of 1.8% is only a modest boost to shareholder returns.
View our latest analysis for Enterprise Financial Services
Enterprise Financial Services' Dividend Forecasted To Be Well Covered By Earnings
Even a low dividend yield can be attractive if it is sustained for years on end.
Enterprise Financial Services has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. While past data isn't a guarantee for the future, Enterprise Financial Services' latest earnings report puts its payout ratio at 17%, showing that the company can pay out its dividends comfortably.
The next 3 years are set to see EPS grow by 21.6%. Analysts estimate the future payout ratio will be 17% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.
Enterprise Financial Services Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was $0.21 in 2012, and the most recent fiscal year payment was $0.96. This works out to be a compound annual growth rate (CAGR) of approximately 16% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Enterprise Financial Services has seen EPS rising for the last five years, at 16% per annum. Enterprise Financial Services definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
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. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 6 Enterprise Financial Services analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Enterprise Financial Services not quite the opportunity you were looking for? Why not check out our selection of top 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.
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