Enterprise Bancorp's (NASDAQ:EBTC) Upcoming Dividend Will Be Larger Than Last Year's

The board of Enterprise Bancorp, Inc. (NASDAQ:EBTC) has announced that it will be paying its dividend of $0.23 on the 1st of June, an increased payment from last year's comparable dividend. Based on this payment, the dividend yield for the company will be 3.2%, which is fairly typical for the industry.

View our latest analysis for Enterprise Bancorp

Enterprise Bancorp's Earnings Will Easily Cover The Distributions

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Having distributed dividends for at least 10 years, Enterprise Bancorp has a long history of paying out a part of its earnings to shareholders. While past data isn't a guarantee for the future, Enterprise Bancorp's latest earnings report puts its payout ratio at 23%, showing that the company can pay out its dividends comfortably.

Over the next year, EPS could expand by 16.2% if recent trends continue. If the dividend continues on this path, the future payout ratio could be 23% by next year, which we think can be pretty sustainable going forward.

Enterprise Bancorp Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of $0.44 in 2013 to the most recent total annual payment of $0.92. This works out to be a compound annual growth rate (CAGR) of approximately 7.7% a year over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Enterprise Bancorp has been growing its earnings per share at 16% a 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.

Enterprise Bancorp 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 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. 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 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.