Enterprise Financial Services' (NASDAQ:EFSC) Upcoming Dividend Will Be Larger Than Last Year's

Enterprise Financial Services Corp (NASDAQ:EFSC) will increase its dividend from last year's comparable payment on the 31st of December to $0.28. Although the dividend is now higher, the yield is only 2.1%, which is below the industry average.

View our latest analysis for Enterprise Financial Services

Enterprise Financial Services' Payment Expected To Have Solid Earnings Coverage

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 established itself as a dividend paying company with over 10 years history of distributing 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.

The next 3 years are set to see EPS grow by 3.9%. The future payout ratio could be 23% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Enterprise Financial Services Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was $0.21, compared to the most recent full-year payment of $1.12. This works out to be a compound annual growth rate (CAGR) of approximately 18% 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.

We Could See Enterprise Financial Services' Dividend Growing

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Enterprise Financial Services has seen EPS rising for the last five years, at 6.6% per annum. 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

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Enterprise Financial Services that investors should take into consideration. 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.