Enterprise Financial Services (NASDAQ:EFSC) Has Announced That It Will Be Increasing Its Dividend To $0.30

Enterprise Financial Services Corp (NASDAQ:EFSC) will increase its dividend from last year's comparable payment on the 30th of June to $0.30. Despite this raise, the dividend yield of 2.2% is only a modest boost to shareholder returns.

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Enterprise Financial Services' Earnings Will Easily Cover The Distributions

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.

Enterprise Financial Services has a long history of paying out dividends, with its current track record at a minimum of 10 years. While past records don't necessarily translate into future results, the company's payout ratio of 21% also shows that Enterprise Financial Services is able to comfortably pay dividends.

The next year is set to see EPS grow by 3.6%. If the dividend continues along recent trends, we estimate the future payout ratio will be 24%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for Enterprise Financial Services

Enterprise Financial Services 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 $0.21 in 2015 to the most recent total annual payment of $1.20. This works out to be a compound annual growth rate (CAGR) of approximately 19% a year over that time. 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.

Enterprise Financial Services Could Grow Its Dividend

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Enterprise Financial Services has grown earnings per share at 9.1% per year over the past five years. Enterprise Financial Services definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Enterprise Financial Services Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Enterprise Financial Services is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. For example, we've picked out 1 warning sign for Enterprise Financial Services that investors should know about before committing capital to this stock. 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.