Enterprise Bancorp (NASDAQ:EBTC) Is Increasing Its Dividend To US$0.20

By
Simply Wall St
Published
January 24, 2022
NasdaqGS:EBTC
Source: Shutterstock

Enterprise Bancorp, Inc. (NASDAQ:EBTC) has announced that it will be increasing its dividend on the 1st of March to US$0.20. Although the dividend is now higher, the yield is only 1.8%, which is below the industry average.

View our latest analysis for Enterprise Bancorp

Enterprise Bancorp's Payment Has Solid Earnings Coverage

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. However, prior to this announcement, Enterprise Bancorp's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS could expand by 14.8% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 20% by next year, which is in a pretty sustainable range.

historic-dividend
NasdaqGS:EBTC Historic Dividend January 24th 2022

Enterprise Bancorp Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2012, the first annual payment was US$0.42, compared to the most recent full-year payment of US$0.82. This works out to be a compound annual growth rate (CAGR) of approximately 6.9% a year 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 Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Enterprise Bancorp has impressed us by growing EPS at 15% 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 Bancorp's prospects of growing its dividend payments in the future.

We Really Like Enterprise Bancorp's Dividend

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 of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in Enterprise Bancorp stock. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.