Enterprise Bancorp (NASDAQ:EBTC) Has Affirmed Its Dividend Of $0.24

Enterprise Bancorp, Inc.'s (NASDAQ:EBTC) investors are due to receive a payment of $0.24 per share on 3rd of September. Based on this payment, the dividend yield will be 3.5%, which is fairly typical for the industry.

See our latest analysis for Enterprise Bancorp

Enterprise Bancorp's Earnings Will Easily Cover The Distributions

We aren't too impressed by dividend yields unless they can be sustained over time.

Enterprise Bancorp has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on Enterprise Bancorp's last earnings report, the payout ratio is at a decent 32%, meaning that the company is able to pay out its dividend with a bit of room to spare.

If the trend of the last few years continues, EPS will grow by 2.2% over the next 12 months. If the dividend continues along recent trends, we estimate the future payout ratio will be 34%, which is in the range that makes us comfortable with the sustainability of the dividend.

Enterprise Bancorp Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from $0.46 total annually to $0.96. This means that it has been growing its distributions at 7.6% per annum over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

The Dividend's Growth Prospects Are Limited

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Earnings have grown at around 2.2% a year for the past five years, which isn't massive but still better than seeing them shrink. While EPS growth is quite low, Enterprise Bancorp has the option to increase the payout ratio to return more cash to shareholders.

Enterprise Bancorp 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. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Now, if you want to look closer, it would be worth checking out our free research on Enterprise Bancorp management tenure, salary, and performance. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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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