The board of Enterprise Financial Services Corp (NASDAQ:EFSC) has announced that it will pay a dividend of $0.25 per share on the 29th of March. This means the annual payment will be 2.4% of the current stock price, which is lower than the industry average.
See our latest analysis for Enterprise Financial Services
Enterprise Financial Services’ Payment Expected To Have Solid Earnings Coverage
While yield is important, another factor to consider about a company’s dividend is whether the current payout levels are feasible.
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. While past records don’t necessarily translate into future results, the company’s payout ratio of 20% also shows that Enterprise Financial Services is able to comfortably pay dividends.
EPS is set to fall by 12.2% over the next 3 years. Fortunately, analysts forecast the future payout ratio to be 23% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.
Enterprise Financial Services Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. 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. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.
We Could See Enterprise Financial Services’ Dividend Growing
The company’s investors will be pleased to have been receiving dividend income for some time. Enterprise Financial Services has impressed us by growing EPS at 5.7% 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 that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. 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 of these factors considered, we think this has solid potential as a dividend stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For instance, we’ve picked out 1 warning sign for Enterprise Financial Services that investors should take into consideration. 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.
