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Enterprise Financial Services Corp (NASDAQ:EFSC) will increase its dividend from last year's comparable payment on the 31st of March to $0.29. This takes the annual payment to 2.0% of the current stock price, which unfortunately is below what the industry is paying.
See our latest analysis for Enterprise Financial Services
Enterprise Financial Services' Earnings Will Easily Cover The Distributions
While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.
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 22% also shows that Enterprise Financial Services is able to comfortably pay dividends.
Looking forward, EPS is forecast to rise by 10.9% over the next 3 years. The future payout ratio could be 22% 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
Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was $0.21 in 2015, and the most recent fiscal year payment was $1.16. 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
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. 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.
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. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 5 Enterprise Financial Services analysts we track are forecasting continued growth with our free report on analyst estimates for the company. 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.