Enterprise Financial Services (NASDAQ:EFSC) Is Increasing Its Dividend To $0.29

Enterprise Financial Services Corp (NASDAQ:EFSC) has announced that it will be increasing its dividend from last year's comparable payment on the 31st of March to $0.29. Even though the dividend went up, the yield is still quite low at only 1.9%.

See our latest analysis for Enterprise Financial Services

Enterprise Financial Services' Payment Expected To Have Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive.

Having distributed dividends for at least 10 years, Enterprise Financial Services 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 Financial Services' latest earnings report puts its payout ratio at 22%, showing that the company can pay out its dividends comfortably.

Over the next 3 years, EPS is forecast to expand by 11.4%. Analysts forecast the future payout ratio could be 22% over the same time horizon, which is a number we think the company can maintain.

Enterprise Financial Services Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the annual payment back then was $0.21, compared to the most recent full-year payment of $1.16. This implies that the company grew its distributions at a yearly rate of about 19% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

Enterprise Financial Services Could Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Enterprise Financial Services has seen EPS rising for the last five years, at 6.6% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

We Really Like Enterprise Financial Services' Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. 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. If you are a dividend investor, you might also want to look at our curated list of high yield 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.