Be Sure To Check Out Enterprise Bancorp, Inc. (NASDAQ:EBTC) Before It Goes Ex-Dividend

Enterprise Bancorp, Inc. (NASDAQ:EBTC) stock is about to trade ex-dividend in 3 days. You will need to purchase shares before the 5th of February to receive the dividend, which will be paid on the 1st of March.

Enterprise Bancorp's next dividend payment will be US$0.18 per share, and in the last 12 months, the company paid a total of US$0.74 per share. Based on the last year's worth of payments, Enterprise Bancorp stock has a trailing yield of around 2.9% on the current share price of $25.34. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Enterprise Bancorp has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Enterprise Bancorp

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Enterprise Bancorp paid out a comfortable 26% of its profit last year.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Click here to see how much of its profit Enterprise Bancorp paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we're glad to see Enterprise Bancorp's earnings per share have risen 11% per annum over the last five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, Enterprise Bancorp has increased its dividend at approximately 6.3% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

The Bottom Line

Should investors buy Enterprise Bancorp for the upcoming dividend? Companies like Enterprise Bancorp that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. Overall, Enterprise Bancorp looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

Keen to explore more data on Enterprise Bancorp's financial performance? Check out our visualisation of its historical revenue and earnings growth.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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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