Enterprise Financial Services (NASDAQ:EFSC) Is 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. Even though the dividend went up, the yield is still quite low at only 2.3%.

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Enterprise Financial Services' Dividend Forecasted To Be Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end.

Enterprise Financial Services has a long history of paying out dividends, with its current track record at a minimum of 10 years. Using data from its latest earnings report, Enterprise Financial Services' payout ratio sits at 21%, an extremely comfortable number that shows that it can pay its dividend.

Over the next year, EPS is forecast to expand by 3.0%. 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.

Check out our latest analysis for Enterprise Financial Services

Enterprise Financial Services Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the dividend has gone from $0.21 total annually to $1.20. This means that it has been growing its distributions at 19% per annum 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

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Enterprise Financial Services has been growing its earnings per share at 9.1% 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 Financial Services' prospects of growing its dividend payments in the future.

We Really Like Enterprise Financial Services' 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for Enterprise Financial Services that investors need to be conscious of moving forward. 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.