Enterprise Financial Services (NASDAQ:EFSC) Is Increasing Its Dividend To $0.31

Enterprise Financial Services Corp's (NASDAQ:EFSC) dividend will be increasing from last year's payment of the same period to $0.31 on 30th of September. This takes the annual payment to 2.2% of the current stock price, which unfortunately is below what the industry is paying.

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Enterprise Financial Services' Earnings Will Easily Cover The Distributions

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.

Enterprise Financial Services has a long history of paying out dividends, with its current track record at a minimum of 10 years. While past data isn't a guarantee for the future, Enterprise Financial Services' latest earnings report puts its payout ratio at 21%, showing that the company can pay out its dividends comfortably.

Looking forward, earnings per share is forecast to rise by 1.4% over the next year. If the dividend continues along recent trends, we estimate the future payout ratio will be 25%, 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 a sustained record of paying dividends with very little fluctuation. Since 2015, the annual payment back then was $0.21, compared to the most recent full-year payment of $1.24. This implies that the company grew its distributions at a yearly rate of about 19% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Enterprise Financial Services has seen EPS rising for the last five years, at 11% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

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. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. 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.